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Global CIO Office

Navigating the recovery Investment Monthly | Japan edition Credit Suisse Securities (Japan) Ltd | June 2020

Japan asset allocation Global investment strategy Japan investment strategy Maintain outperform on equities USD loses its appeal Equity and credit remain attractive and credit

page 6 page 11 page 3

Important Information This report represents the views of the Investment Strategy Department of CS and has not been prepared in accordance with the legal requirements designed to promote the independence of investment research It is not a product of the Credit Suisse Research Department even if it contains published research recommendations CS has policies in place to manage conflicts of interest including policies relating to dealing ahead of the dis-semination of investment research These policies do not apply to the views of Investment Strategists contained in this report Please find further important information at the end of this material Singapore For accredited investors only Hong Kong For professional investors only Australia For wholesale clients only

Editorial

Michael Strobaek Global Chief Investment Officer

Burkhard Varnholt Chief Investment Officer ndash Swiss Univer-sal Bank

The resilience we highlighted last month has been on full display over the last few weeks Despite a very recent pullback in US equities markets have broadly rallied as many investors left the sidelines amid worries that they might miss out As a result many equity indices have managed to recoup a signif-icant part and in some cases all of their year-to-date losses

The moderate equity overweight we have had in portfolios since late March has of course helped us to benefit from this strong rebound Nevertheless in the Investment Commit-tee we critically assess our House View regularly particularly after such a successful stretch Temporary setbacks are possible but we retain our risk asset exposure and remain overweight equities and credits in portfolios for now We be-lieve that the substantial fiscal and monetary stimulus the lack of alternatives for yield-seeking investors amid very low interest rates and the inclusion of lower-rated corporate bonds in central banksrsquo asset purchase programs should un-lock further upside in the medium term We also remain overweight commodities particularly energy which should benefit from the expected rebound in economic activity as countries emerge from the ldquogreat global pauserdquo forced by the lockdowns

Mindful of potential risks we are keeping a close eye on factors such as infection numbers signs of investor exuber-ance and political developments In this context one of our special topic articles looks at how financial markets and poli-tics interact and explains what it takes for the latter to impact markets Separately we analyze whether investors should worry about the effect of the coronavirus crisis on inflation

We hope the pages ahead provide valuable guidance for your investment decisions

In this issue

Japan investment strategy 3 Equity and credit remain attractive

Japan asset allocation 6 Maintain outperform on equities and credit

Investment themes and solutions 8 Anxious societies ndash inclusive capitalism Investment solutions

Economics 10 Global growth has troughed

Global investment strategy 11 USD loses its appeal

Special topic 12 How politics and markets interact

Special topic 13 What happens to inflation

Fixed income 14 Credit remains attractive

Equities 15 Recovery is broadening

Alternative investments 17 Oil set for a pause

Foreign exchange 18 Dollar peaks

Forecasts 19 At a glance

Editorial deadline 17 June 2020

Investment Monthly | Japan edition Credit Suisse Securities (Japan) Ltd June 2020 2

Japan investment strategy

Equity and credit remainattractive While uncertainties remain our House View calls for an economic recovery in Q3 2020

Fiscal and monetary policy should provide continued support for such a recovery

The appeal of the USD is likely to fade in a prolonged zero-interest rate environment

Soichiro Matsumoto Chief Investment Officer Japan

Post-pandemic economic recovery The long and winding road Developed economies are limping back to normalcy as lock-downs are lifted and economic activities resume With the world having gained some invaluable experience of dealing with COVID-19 the likelihood of a re-run of the panic seen in the early days of the pandemic is diminishing If a second wave of COVID-19 infections were to occur the authorities should be ready to respond calmly and be prepared to contain the spread of the virus Additionally the unremitting fiscal policy measures and increased monetary easing in place should prevent the economic conditions from deteriorating further

On the whole we believe the second quarter represents the nadir of the current economic cycle and the global economy should begin to recover in the third quarter However there remains significant uncertainty regarding the future economic trajectory and the road to recovery will undoubtedly be a long and winding one

Where do massive monetary easing and fiscal spending lead us to The relentless and aggressive fiscal policy support from gov-ernments across the world has led to a sustained expansion of debt However lower interest rates brought about by massive monetary easing have cushioned the debt burden somewhat We thus expect monetary easing to continue for a relatively long period of time The reliance on policy tools to respond to the crisis is likely to go beyond the usual slashing of rates to quantitative easing and other measures in order to keep interest rates low In the long term if growth does not reach a level that exceeds the cost of debt once the economy recovers the debt burden could weigh heavily on economic growth This will in turn lead developed economies to implement bold growth strategies to shore up long-term growth rates

Equity and credit remain attractive Although the path of economic recovery will be a long and uncertain one the risk of recession is likely to recede as fiscal and monetary policy measures should provide a key support There will be times in the future when equity valuations might look overstretched on the back of a significant fall in expected current year earnings However apart from the support pro-vided by low interest rates we also expect prices to gradually shift to a phase of price discovery that should take into ac-count profit forecasts for the next fiscal year and alleviate concerns about overvaluation For this reason we believe global equities remain an attractive asset class

We also believe that corporate bonds and other similar credit instruments will continue to be attractive in the context of long-term corporate financial support and monetary easing measures

USD The receding allure of its carry As the pandemic spread the US dollar (USD) had proved its mettle as one of the most valuable assets in the world While this episode reaffirmed the USDrsquos resilience due to its position as the global settlement currency (reserve currency) this might have now run its course

To support the US economyrsquos recovery the Federal Reserve (Fed) made it clear at its June policy meeting that it would maintain its zero-interest rate policy through 2022 This has set back the carry trade that has made the USD so attractive against the majors We have therefore decided to take a more cautious view of the USD

Rebuilding the global supply chain One of the more important lessons the pandemic has taught us is the risk posed by centralized procurement of critical supplies and other items The avoidance of supply chain centralization will thus be a key theme when it comes to managing the post-pandemic global economy


At the same time however a greater degree of supply chain control will be required as efficiency and productivity cannot be sacrificed Therefore this new era in supply-chain man-agement will likely at a technical level require the use of ar-tificial intelligence (AI) in end-computing and the application of the internet of things (IoT) technology and more advanced (high-capacity and high-speed) networks (5G) to effectively manage multiple supply chains This among other things represents one of the key focus areas of our Supertrends the thematic ideas geared to provide lasting and long-term investment opportunities

Americarsquos quadrennial presidential election The 2020 Tokyo Olympics have been postponed to 2021 due to the coronavirus pandemic However US presidential and congressional elections to elect the leadership of the worldrsquos largest economy will still take place as planned

As the world economy shifts from a globalized to a multipolar orientation US leaders and the policies they put forward will have important implications for the rest of the world Candi-dates will be officially nominated by the Democratic Party in July and the Republican Party in August and their respective campaigns will heat up as the November election deadline approaches Market sentiment over the next five months will likely be influenced by which of the two parties lead the competition whether it is the Republican Party which seeks to promote large-scale fiscal and monetary easing or the Democratic Party which emphasizes a more traditional ap-proach Thus there may be instances in which election trends affect the market through market sentiment

Recommended investment strategies

In the first half of 2020 the financial markets were subject to large fluctuations testing investorsrsquo mettle when it came to the issue of controlling risk However the cost of hedging risk also increased significantly and there were cases where establishing an effective hedging strategy was difficult At first glance it may seem that the necessity of diversified in-vestment has diminished due to the tide of risk-off sentiment that has manifested simultaneously around the world In ret-rospect however we believe that the reality is somewhat different

Diversification of investment into various regions and assets using different investment tools is likely to be advantageous as far as securing emergency liquidity is concerned Among bonds it is possible to mitigate overall risk by holding a com-bination of government bonds as well as corporate bonds which behave in a highly equity-like manner Furthermore as risk assets rebound bonds appear to have started to follow suit without significant delay Thus we believe that the current market turmoil has reaffirmed the efficacy of a global diversi-fication approach to investing

1 Putting cash to work Large-scale monetary easing has been implemented as an economic stimulus measure and it is increasingly apparent that the current low interest rate environment will last for a long time Following in the footsteps of Japan and the Euro-zone the USA has decided to prolong its zero-interest rate policy

As a result in terms of cash management traditional invest-ment strategies (deposits short-term government bonds etc) are no longer expected to provide satisfactory results forcing investors to consider other options As part of our cash replacement strategy we are currently focusing on the assumption that the exchange rate will remain within a gener-ally constant range while real interest rates are less likely to diverge significantly Thus we believe the effectiveness of strategies that combine volatility with foreign currency deposits to secure yield will increase

2 Yield-boosting operations The prevailing low interest rate environment will make it more difficult for investors to earn yield We generally consider two approaches to securing yield The first is to minimize costs such as fees and lost opportunity One solution involves leveraging a yield-seeking discretionary investment approach by introducing mechanisms that enable more detailed portfolio management in accordance with a given investment policy The second is to zero in on credit that is more secure with a sufficient spread We currently find attractive investment grade corporate and high yield credit issued in developed countries as well as major currency-denominated government bonds issued in emerging countries

3 Long-term return growth strategy Equities From a medium-term perspective we believe that equities and alternative investments will provide higher returns than bonds From a longer-term perspective certain businesses (technology sharing economy senior services sustainable business etc) provide high growth opportunities The growth of such businesses can generally be attributed to social and economic structural changes and political changes such as the ongoing shift from a globalized to a multipolar world as well as population decline caused by a declining birthrate and aging population The above structural changes coupled with the emergence and evolution of new technologies have spawned new business and growth opportunities

At Credit Suisse we focus on long-term investment themes as part of our Supertrends series and focus more specifically on investment in growth stocks that conform to the said themes

Additionally in an environment where volatility repeatedly rises in a short cycle an investment approach that provides stabil-ity to onersquos stock portfolio is warranted We are currently fo-cusing on long-short equity strategies that involve portfolio investment in stable high-yield stocks while hedging against certain market risks


4 Multi-asset management (globally diversified invest-ment) In an environment of low returns and high volatility it is nec-essary to incorporate investments that carry a higher level of risk in order to achieve higher target returns The key point here is whether or not onersquos investment strategy incorporates mechanisms for controlling overall risk while keeping costs down As a core management strategy for long-term asset formation we are focused on multi-asset discretionary invest-ment that targets a wide variety of assets globally

(17062020)


Japan asset allocation

Maintain outperform on equitiesand credit The current economic recovery and favorable policies should support risk assets such as equities and credit

We maintain an underperform on government bonds in a portfolio context

Soichiro Matsumoto Investment map [regions vs asset classes] Chief Investment Officer Japan

Maintain outperform on global equities Although valuations appear high at times the current uptrend in global equity markets is likely to continue over the medium term supported by the expectation of improved profits as the economy recovers as well as favorable fiscal and monetary policy We thus maintain a moderate tactical outperform view on global equities in a portfolio context

Remain outperform on credit Despite persistent uncertainty we expect the economy will start recovering in Q3 FY 2020 and we retain our outperform view on credit markets in our portfolio due in part to the presence of policy support

Source Credit Suisse

(16062020)


JPY international TAA (balanced) Balanced TAA versus bench- Benchmark SAA

mark

May June Change May June

Liquidity 20 15 -05 -30 -35 50

JPY 20 15 -05 -30 -35 50

Fixed income 475 475 00 00 00 475

JPY 25 25 00 -15 -15 40

Global Corporates

Global High Yield

Emerging Markets USD

Emerging Markets LC

Global Convertibles

350

35

40

25

00

350

35

40

25

00

00

00

00

00

00

05

05

10

-05

00

05

05

10

-05

00

345

30

30

30

00 Equity

Japan

435

160

440

160

05

00

10

-05

15

-05

425

165

World (ex Japan) 275 280 05 15 20 260

Switzerland 15 15 00 10 10 05

Euro Zone 25 30 05 00 05 25

North America 125 125 00 00 00 125

United Kingdom 15 15 00 05 05 10

Australia 05 05 00 00 00 05

Emerging Markets 30 30 00 00 00 30

LatAm 00 00 00 00 00 00

APAC 25 25 00 00 00 25

EMEA 05 05 00 00 00 05

Supertrend 60 60 00 00 00 60

Silver Economy 25 25 00 00 00 25

Angry Society 20 20 00 00 00 20

Millennials Value 15 15 00 00 00 15 Alternative invest- 70 70 00 20 20 50 ments

Real Estate 25 25 00 00 00 25

Commodities 45 45 00 20 20 25

Gold 00 00 00 00 00 00 Total 1000 1000 00 00 00 1000



Investment themes and solutions

Anxious societies ndash inclusive capitalism Investment solutions As part of our Supertrend ldquoAnxious societies ndash inclusive capitalismrdquo we discuss invest-ment solutions related to three sub-themes affordability employment and personal security

Maki Shimizu Investment Strategist - Japan Strategy

Anxious societies ndash inclusive capitalism Inclusive capitalism refers to the concept of spreading wealth broadly throughout society The problems of capitalism which creates winners and losers as well as social polarization can largely be explained in terms of structural factors and income We are focused on businesses that contribute to sustainable economic growth via the sub-themes of employment and personal security (as pertaining to structural factors) and af-fordability (as it pertains to income)

The outbreak of the novel coronavirus has shaken up everyday life and far from being over continues to force many people to live under various restrictions The general populationrsquos anxiety in such an environment is symbolized by the aforemen-tioned sub-themes For example the wholesale shutdown of economic activity following the emergence of the novel coro-navirus has led to a sharp rise in unemployment around the world Job instability is likely to widen the wealth gap and also directly leads to lower growth rates It is highly likely that economic solutions will be required to address growing inequal-ity and poverty as well as concerns about the sustainability of capitalism and that there will be an increasing tendency for the public and private sectors to work together to meet their social responsibilities

Investment solution features As far as affordability-related solutions are concerned we prefer companies that provide solutions lowering the cost of basic life needs such as health care and housing companies that provide retraining and upskilling and companies that help to improve the safety of people Companies that employ technology to provide affordable and accessible health care will have more room for growth in the future

Investment solutions related to employment include companies that are leading the charge to provide solutions for lifelong learning skills education and skills retraining during worker re-entry into the workforce

As for personal security-related solutions investors should focus on companies that can provide solutions enhancing cyber security The pace of information leakage has acceler-ated in recent years as the amount of personal data has in-creased dramatically and information has increasingly moved online The increased number of people working from home following the outbreak of the novel coronavirus has further raised awareness of the importance of information security As more and more data goes online there will likely be con-tinuous increased demand for services that help people feel safe and secure In mutual funds investors can consider the Global Security Fund based on its allocation to sectors and themes of interest (17062020)


Supertrends

Theme Detail Recommended solution

Anxious societies ndash Inclusive capitalism

AM One Global Security Stock Fund CS Beneficiaries of Angry Societies Selection

Affordability Basis goods such as housing healthcare or pension have become unaffordable for many people

Employment Skilling reskilling and upskilling are crucial steps as technical progress radically changes required skill set

Personal security Everyday challenges such as the pandemic outbreak or cybersecurity are the most important pain points for people

Infrastructure ndash Closing the Global Core Infrastructure Stock gap Fund CS Infrastructure List

Transport Developed markets have to invest in project replacements while emerging markets continue to spend on growth

Energy amp water Energy transition towards renewables to limit global carbon emission Middle East faces an acute water shortage

Smart cities As 68 of the worldrsquos population will live in urban areas by 2050 cities must become smarter to handle this strong growth

Telecom infrastructure As 5G will be the next major investment cycle for the mobile industry mobile traffic could grow almost five-fold

Technology at the service of AM One Global Security Stock humans Fund CS Technology Selection

Digitalization The number of connected devices surging and thus edge computing is expected to gain traction in order to capture even more value from data

Virtual reality Growing to the size of todayrsquos smartphone market in the years ahead

Artificial intelligence Material growth potential for home industries and cities digitalization for healthtech and fintech markets

Industry 40 Robots and automation are entering various non-industry sectors demand for industry robots is rising

Healthtech Digitalization solution biotechnology and AI in product development and healthcare research Silver Economy ndash Investing for Select Sector SPDR ETFs (Health-population aging care Consumer Staples Consumer

Discretionary) CS Silver Economy Stocks

Therapeutics amp devices Biopharma and medical device companies to innovate around senior conditions such as heart disease amp cancer

Care amp facilities Managed care organisations hospitals and dedicated facilities to face increasing demand

Health amp life insurance Private pension gap in emerging markets and growing importance of private pension fund amp insurance solutions

Senior consumer choices High spending power of seniors to benefit consumer companies with senior-centric offerings Millennials values AM One Global Security Fund CS

Millennials Favorites

Sustainable business and invest- ESG overlay across the entire Millennials stock universe to underpin the importance of sustainability ments

Digital natives Being connected 247 having a strong preference for technology brands driving an education technology revolution

Fun health amp leisure A new way of living and spending with substantial growth potential in emerging markets Climate Change AM One Global Security Fund CS

Climate Change Choice

Carbon-free electricity CO2 neutral electricity production and the replacement of coal-fired electricity as a key component of CO2 reduction

Oil amp gas transition pioneers Demand for fossil fuel remains high for now while the transition pioneers will leading the sector

Sustainable transport Sustainable fuels a switch to electric vehicle more efficient engines and railroads will reduce GHG emissions

Agriculture amp food A growing population and a high CO2 emission from the agriculture sector require efficiency gains



Economics

Global growth has troughed Economic activity troughed in April and in the coming months the partial end of lock-downs will bring extremely high quarter-on-quarter growth

However the level of activity will remain far below trend for the foreseeable future We forecast global GDP growth of ndash37 in 2020

Peter James Foley Economist

In the USA and Europe new COVID-19 infections have peaked and fallen significantly But outside of the New York area US infections have been going mostly sideways and are now increasing in some states that reopened weeks ago In Europe Sweden which never fully closed recently led the world in daily recorded COVID-19 deaths per capita but it has avoided dramatic increases in infections and deaths In Russia Brazil and Mexico the latest infection and death data are troubling Much of East Asia continues to have success in limiting contagion but local outbreaks are still causing new local prevention measures

Recent research makes an observation that might fit with this mixed picture it suggests that COVID-19 spreads dispropor-tionately through ldquosuperspreader eventsrdquo with about 10 of cases leading to 80 of the spread If this is the case per-haps by limiting crowding and wearing masks the reproductive number of the virus can be kept low enough to prevent sharp outbreaks that overwhelm health care systems

Major economies reopening Many governments are now seeking to avoid full shutdowns even amid ongoing contagion risk Economic reopening will bring a sharp rebound in economic activity but normal levels of business will be far off until there is some breakthrough in treatments vaccines low infection levels or mass immunity

The initial rebound in economic activity will mostly reflect workers returning to their jobs The US unemployment rate likely peaked in April and should now fall at a sharp but decel-

erating rate over time We expect unemployment to remain far above pre-pandemic levels at the end of the year around 8-10

Unemployment will remain elevated due to three highly uncer-tain factors First weak earnings battered balance sheets and closed businesses will lower demand for workers Second firms in some sectors are likely to forecast sluggish future sales if contagion is still limiting demand for travel restaurants and entertainment And third the mass experiment with working from home has likely led many businesses to recog-nize new ways to be efficient with space people and technol-ogy

Uncertainty remains Uncertainty over new outbreaks will persist Shutdown risks will not go away even if national shutdowns are less probable for large economies Policymakers will likely need to address holes in existing stimulus We see fiscal help for US states further extensions to unemployment benefits the EU recovery fund and possible yield curve control by the Federal Reserve as the next policy steps all with good chances of implemen-tation

Recent financial market behavior appears to have anticipated the coming rebound in growth momentum the positive effects of the stimulus now in place and the slowdown in new infec-tions in the largest economies But looking ahead high un-employment damaged businesses and ongoing contagion present serious threats (11062020)


Global investment strategy

USD loses its appeal The Credit Suisse Investment Committee has changed its view on the broad US dollar index (DXY) from neutral to unattractive

We maintain overweight positions in equities and credit markets as well as the broad commodity index Yet we remain vigilant of risks

Walter Edelmann Chief Global Strategist

Since we decided to enter overweight positions in equities and credit in late March markets have rallied By now the US market (SampP 500) is about flat year-to-date and only around 5 shy of its all-time high before the spread of COVID-19 sent markets tumbling in late February Most re-cently more cyclical as well as lower quality assets have played catch-up in a sign that more pronounced risk seeking has begun This might seem counterintuitive given that the global economy has simultaneously fallen into recession Are markets ahead of reality and ripe for a setback

Moderate equity overweight maintained Besides Western countries opening up three factors have driven the rally which we think should allow for further upside over the medium term first massive fiscal and monetary policy measures have gone a long way to curtail the tail risk of a credit crisis and depression Second by reducing interest rates close to zero the Federal Reserve (Fed) further accen-tuates the difficulty for investors to find reasonably valued low-risk alternatives Third in opening up its asset purchase program to lower-rated corporate bonds the Fed has man-aged to compress credit spreads We think that monetary policy will remain a key market support with large quantitative easing programs backing up government finances also in Europe where fiscal policy has shifted into higher gear

However this does not preclude temporary setbacks We would caution against simply piling into riskier and potentially shakier assets in the hope of compensating for missed oppor-tunities We keep a moderate tactical overweight in equities as sentiment does not appear euphoric yet However we are

closely watching indicators to determine whether sentiment is becoming too bullish Moreover we keep close watch on risk factors such as infection rates and geopolitical develop-ments

Retain overweight in credit and commodities We maintain overweight positions in credit markets including investment grade high yield and emerging market hard cur-rency bonds Although yield advantages over treasuries (spreads) have compressed after a strong performance in recent weeks we perceive yield levels as sufficient to com-pensate for risks given the continued backing from central banks In commodities oil rallied sharply on production cuts with WTI gaining about 60 over the month We stay positive on oil and the broad commodity complex which should also receive support from a recovery in economic activity

USD view changed to unattractive We see the recent weakness in the USD as the start of a more sustained depreciation trend against major currencies including the EUR A key factor driving this trend is the USDrsquos vanishing interest rate advantage This was accentuated by the most recent rate guidance from the Fed which promised to keep its policy rate close to zero at least up to the end of 2022 The EUR however is expected to gain as credible proposals have emerged for meaningful fiscal stimulus at the EU level

Watch a video featuring the highlights of the Credit Suisse investment strategy wwwcredit-suissecomciofilm

(15062020)


Special topic

How politics and markets interact Recent demonstrations and unrest in the USA have made headlines around the world

While such events tend to have a limited impact on financial markets numerous polit-ical developments may sway markets in the months ahead We look at the most impor-tant ones

Nannette Hechler-Faydherbe Chief Investment Officer ndash International Wealth Management

Social unrest matters enormously in citizensrsquo daily lives and sometimes even has a measurable negative macroeconomic impact However it does not necessarily take a big toll on fi-nancial assets A case in point Hong Kongrsquos economy shrank by ndash30 in 2019 while the MSCI Hong Kong gained +71 that year

The importance of economic policy What matters for financial markets is how political events translate into economic policy In that sense investors current-ly have plenty to keep an eye on In the USA for example US equity investors need to watch two economic policy areas going forward 1) the ability of Congress to pass a balanced fiscal package and 2) tax policy after the US presidential elections in November The first is key for the US economic outlook while the second could undermine future earnings trends and equity valuations

An increase of corporate taxes in particular would have a meaningful negative effect on earnings and profitability leading to less optimism on the US equity market So the key is how the outcome of the upcoming US elections is shaped by events and economic developments until then Given nu-merous factors that can influence the outcome between now and November developing a view on the result of the US elections will most likely prove challenging until the very end

US-China trade tussle rears its head On US-China trade and political tensions we are again in tit-for-tat mode Hong Kongrsquos special trade status will not have much of an impact neither on Hong Kong nor on the USA as trade flows between the two are limited However it may slow US agriculture exports to China as state-run agricultural companies have reportedly been asked to halt purchases from the USA which in turn may see a round of US tariff in-creases on Chinese exports However there is a good chance that the escalation will remain more symbolic than real in 2020 considering the severe state both economies are in

A US bill that could delist some Chinese companies from selling shares on US stock exchanges would in turn impact the Hong Kong stock market and potentially the USD It could result in an estimated USD 1 trillion of added capitalization for Hong Kongrsquos exchange assuming that delisted Chinese stocks would be listed in Hong Kong This could additionally weaken the USD which we expect to depreciate further against the major currencies in the months ahead

Money expansion set to drive economies Meanwhile the most meaningful economic policy development in Europe and beyond is money expansion driven by credit expansion and fiscal spending Strong money and credit growth are clear evidence of the macroeconomic transmission of expansive monetary policy In the Eurozone we estimate that money supply growth will be 15 YoY by the end of 2020 the fastest in the Eurozonersquos existence This should prove a powerful remedy to kick-start the Eurozone economy and normalize inflation and eventually bond yields For in-vestors the implication is to take a negative view of Bunds while being constructive on the German equity market

(12062020)


Special topic

What happens to inflation We are often asked what the COVID-19 crisis means for inflation Will it push western economies into deflation will it deliver higher inflation Our answer is ldquobothrdquo

In the near term inflation is likely to fall in response to the recent recession But in the longer term the economic policy response risks higher inflation

Neville Hill Chief European Economist

The collapse in economic activity caused by COVID-19-related lockdowns is pushing inflation down Lower oil prices and weak (or non-existent) demand for many goods and services are dampening inflation Headline and core inflation rates have fallen sharply in the USA and Europe and inflation should remain low until economic activity has fully recovered something we only expect late next year or in early 2022

Beyond that horizon we think inflation could pick up signifi-cantly And that is due to the policies deployed to contain the economic damage from this crisis ndash large fiscal stimulus packages and massive central bank quantitative easing pro-grams

Why this time is different Many investors point to the failure of past quantitative easing programs to generate higher inflation as evidence that these programs will also fail However we believe this time is differ-ent Central bank action is being complemented by tailwinds from larger government deficits and strong bank lending This means the stimulus is producing a sharp increase in money supply growth ndash something it failed to do after the global fi-nancial crisis when banks and governments were consolidating their balance sheets

Measures of broad money supply growth in the USA and Europe have risen sharply in recent months and are in or approaching double digits their fastest for well over a decade It can take time for money supply inflation to pass through to higher consumer price inflation It is hard for ldquotoo

much moneyrdquo to chase ldquotoo few goodsrdquo during lockdown for example But this big increase in the money supply may signal strong pent-up demand in the future which could lead to a surge in prices

Policymakers play key role The extent to which inflation stays high will depend on policy-makers If governments and central banks reverse their COVID-19 policies quickly after normality returns then any rise in inflation could be limited But we think that both gov-ernments and central banks will be comfortable accommodat-ing somewhat higher inflation having failed to generate it for over a decade That would help them reduce the considerable government debt burden accumulated during this crisis as well

Money supply growth picks up

-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy

Source European Central Bank Credit Suisse

(11062020)


Fixed income

Credit remains attractive Central banks are keeping interest rates low accentuating investorsrsquo search for yield We reiterate our preference for credit over government bonds

We maintain a moderate overweight in EM HC bonds IG and HY credit in our portfolios

Luca Bindelli Head of Fixed Income and Currency and Commodity Strategy

We expect benchmark yields to rise moderately on signs that the major economies are bottoming and likely to recover in the coming months While central banks are keeping short-maturity rates low yields of longer-dated government bonds could rise despite central banksrsquo asset purchase programs Bond issuance has picked up significantly to finance the im-mense fiscal programs initiated in response to the COVID-19 crisis hence we expect the increase in issuance to push long-term yields moderately higher leading to a further steepening of the yield curve Given the low yields and medium-term in-flation and bond supply risks implied by the monetary and fiscal policy mix we consider government bonds unattractive and remain short duration We remain underweight in a port-folio context and prefer Italian over German bonds as the strong support from the fiscal and monetary policy side could lead to a further spread narrowing in the Eurozone

Keep IG and HY overweight in portfolios Global investment grade (IG) and high yield (HY) delivered solid positive returns last month with spreads tightening fur-ther The strong rally reflects a combination of decelerating corporate debt issuance robust investor demand after the Federal Reserve (Fed) started buying IG and HY Exchange Traded Funds (ETF) and stabilizing economic data Looking ahead we expect these drivers to remain supportive of corpo-rate credit spreads as the Fedrsquos ETF buying program contin-

ues and investors put capital to work We acknowledge that valuations are no longer as attractive after the recent spread tightening but we believe that central banksrsquo purchase pro-grams speak in favor of keeping our positive views on IG and HY corporate credit In HY we favor 5ndash7-year duration for BB-rated issuers and see more value in previously stressed segments such as energy and metals amp mining While HY defaults are still expected to increase the recent downward revision of Moodyrsquos 12-month default forecast and the strong monetary and fiscal policy support are likely to reduce the jump-to-default risk We also continue to favor European sub-financials

EM bonds still offer attractive return prospects Emerging market hard currency (EM HC) bonds continued to deliver strong returns last month There is still scope for additional positive economic surprises reinforcing our recovery scenario and supporting risk taking Our EM risk appetite in-dex has improved significantly returning to pre-crisis levels In this environment EM-focused funds have been increasing risk exposure as both retail and institutional inflows picked up Moreover EM countries have recovered their access to international markets which eases concerns about financing needs Our constructive view has largely played out so we do not expect EM spreads to continue tightening at the same pace Yet performance can still improve even if the market moves sideways Regionally we remain positive on Eastern Europe Middle East and Africa negative on Latin America and neutral on Asia (12062020)


Equities

Recovery is broadening We now expect the consumer staples sector rather than industrials to underperform as we rotate into a phase characterized by economic reacceleration

Eurozone banks and US telecom companies offer tactical opportunities

Philipp Lisibach Head of Global Equity Strategy

The pessimistic investor sentiment and positioning we wit-nessed a month ago have started to improve though they remain neutral at best At the same time equity markets have continued to grind higher feeding off news about the easing of lockdowns The latest macroeconomic indicators suggest that economic activity is accelerating and continued positive news flow from central banks and governments suggests that the favorable backdrop is likely to remain in place for the foreseeable future

Rotating into the next phase As the economy is showing signs of bottoming out investor focus is rotating from defensive exposure that behaves partic-ularly well in a downturn to segments that can profit from the improving environment typically found in cyclical or value in-dustries In this context we close our successful underperform view on the global industrials sector as valuation has become more favorable and the outlook has improved since economies are reopening We now expect the consumer staples sector to tactically underperform global equities as these companies tend to fall out of favor when the economy picks up and inter-est rates stop falling and perhaps even rise a little The valu-ation of the sector is not particularly attractive and we are not seeing a clear catalyst to drive further inflows in the cur-rent rotation

These view changes together with our expectation since late May that the German equity market will outperform position us well at the beginning of this next phase At the same time as uncertainty remains elevated we maintain some risk off-setting elements in our strategy including positive views for health care and Swiss equities both of which are enjoying solid fundamentals We also continue to expect the informa-tion technology sector to outperform Despite its very strong performance we see it as the main beneficiary of the coron-avirus crisis leading to favorable fundamentals and therefore making it less vulnerable to negative surprises However valuations are starting to look demanding and investors have to be selective Nevertheless we believe it is too early to take profits

Tactical opportunities in Eurozone banks and US tele-coms With strong fiscal and monetary policy support in the Euro-zone an economy that has good sensitivity to an economic reacceleration and the help from Bund yields that have started to move higher we see an attractive tactical opportu-nity in Eurozone banks Also our view that the EUR may gain further strength is supportive for the sector while valuation is meaningfully below average (eg an undemanding pricebook ratio of 04)

Despite its strong fundamentals the US telecom sector is trading at a 44 discount to global equities versus a long-term average of 1 The year-to-date underperformance of the sector implies catch-up potential and cushions the downside in case of a pullback of the broader market A very appealing dividend of over 5 backed by strong cash flows and low positioning in the sector further support our positive view (12062020)


Global equity sector strategy and top picks from Research (3-6 months) Sector view Eurozone (N) UK (O) Switzerland (O) USA (N) APAC (N)

Energy (O) Repsol Total BP Pioneer Natural Resources Williams Chevron Cheniere Energy

Materials (N) Victrex Anglo American Air Liquide Air Products amp Chemicals Newmont Smurfit Kappa Symrise BHP Ecolab Sherwin-Williams+

Industrials (N) Schneider Electric Smiths Vinci Georg Fischer Schindler Honeywell Union Pacific Sany Heavy Industry Shenzhen Airport Siemens Experian

Consumer discretionary (N) LVMH BMW Informa Target Restaurant Brands International China Tourism Group Duty Free+ Pt The Home Depot Nike Map Aktif Adiperkasa Tbk+ Wynn

Macau+

Consumer staples (U) Danone Kerry Carlsberg Nestle Coca-Cola Walmart Kweichow Moutai

Healthcare (O) Royal Philips Fresenius Novo Nordisk Novartis Roche Alexion Mylan Biomarin Pharmaceuti- Jiangsu Hengrui Yunnan Baiyao Siemens Healthineers cal Merck amp Co

Financials (N) AXA Creacutedit Agricole KBC Banco San- Zurich Insurance Cembra JPMorgan Chase Bank of America Bank of China+ Industrial and Commer-tander UniCredit Barclays Prudential Money Bank Partners The Blackstone Chubb Progressive cial Bank of China+ RSA Insurance UBS

IT (O) Telefon AB LMEricsson Visa IBM Micron Technology Sales- Samsung Electronics Largan Preci-forcecom sion Hangzhou Hikvision SK Hynix

Luxshare Precision Industry Shenzhen Sunway

Communication services (U) Vodafone Telefonica Vivendi Orange Sunrise Communications Alphabet Facebook China Mobile PCCW

Utilities (N) RWE Iberdrola EDP NextEra Energy Eversource Energy

Real Estate (N) Vonovia Deutsche Wohnen Equinix American Tower UOL Mapletree Industrial

These are our sector strategy and top picks as of 16 June 2020 recommended by Credit Suisse International Wealth Management division Our sectorindustry strategy shows our sectorindustry preferences with recommendations relative to regional benchmarks Global (MSCI World in USD) Europe (MSCI Europe in EUR) Switzerland (Swiss Market Index in CHF) USA (SampP 500 in USD) Asia-Pacific (MSCI AC Asia-Pacific in USD) An outperform (underperform) view is a recommendation to invest more (less) than in a neutral position indicated by the market-cap weights of the respective benchmarks The sectorindustry weights as well as the neutral positions in figures are available upon request please contact your relationship manager Top Picks is a selection of our favorite stocks within our coverage The selection was made to reflect the sectorindustry and regional preferences Reg-ular full updates are provided via our Investment Monthly publications as well as in our Equity Research reports Additionally we publish our additions and drops in our Investment Daily publication Legend (O) = Outperform (N) = Neutral (U) = Underperform Changes are marked as follows (+) = additions to the Top Picks () = changes to sectorindus-trycountry weightings For further information including disclosures with respect to any other issuers please refer to the Credit Suisse Global Research Disclosure site at httpwwwcredit-suissecomresearchdisclaimer Please note that trading facilities in certain securities may be limited Source Credit Suisse


Alternative investments

Oil set for a pause The reading of our hedge fund barometer has moved from negative to neutral indicating better investment conditions for growth and liquidity-reliant strategies In real estate we keep our preference for US listed real estate

The rebalancing process in commodities is in full swing Oil may pause after a stellar rally but we still see some medium-term upside Expectations for USD softness are helping gold while we are waiting for inflation expectations to pick up

Jelena Kucenko Head of Alternative Investments

Stefan Graber Head of Commodity Strategy

Hedge funds Investment conditions improved Hedge funds posted low single-digit returns over the last month with fundamental and relative value strategies outper-forming tactical ones While relative value benefitted from a tightening in corporate and structured credit spreads longshort managers capitalized on oversold stocks in cyclical sectors As economic activity and liquidity conditions improved our hedge fund barometer reading moved from negative to neutral indicating better investment conditions for growth and liquidity-reliant relative value and fundamental strategies Furthermore a recent fall in inter-stock correlations supports security selection helping fundamental strategies in particular A balanced allocation across hedge fund strategies remains appropriate at this stage

Commodities Oil still favored but pause is likely Commodities started to recover in recent weeks led by oil while other cyclical segments also did well Gold paused but held up The nascent recovery in industrial production should provide a supportive backdrop heading into Q3 That said the oil rally has been very rapid and we would expect a pause in the near term as the large inventory overhang still needs to be worked off Current price levels risk re-activating idled non-OPEC supply and tactical positioning for US crude West

Texas Intermediate is now long However the medium-term rebalancing process is set to continue thanks to continued restraint among OPEC and allied producers and we expect some further upside later on Base metals should also benefit from a cyclical recovery but we prefer energyoil as metals supply could respond more swiftly to better demand Gold remains a crowded trade which suggests some tactical vul-nerabilities Nevertheless the interest rate environment is set to stay favorable for gold while USD weakness which we expect to continue is helpful too For more meaningful upside we need inflation expectations to pick up (and drive real yields further into negative territory) but this may take longer to materialize

Real estate USA preferred Listed real estate lagged global equities in May but has out-performed of late The risk-on environment triggered a rotation into more cyclical sectors such as office and retail as well as oversold segments such as senior housing We think that in-vestor concerns over the long-term implications of working from home and the impact of e-commerce on property mar-kets have been excessive Valuation and lower interest rates are supportive but earnings are likely to be revised lower We therefore expect listed real estate to perform broadly in line with equities at this stage Regionally we favor the USA as lower interest rates are not yet fully reflected in share prices while relatively higher exposure to defensive sectors and lower development exposure add to this regionrsquos resil-ience (12062020)


Foreign exchange

Dollar peaks We turn negative on the USD as carry has vanished growth is bottoming and US fiscal balances are weakening

We like the EUR NOK SEK and NZD in G10 and now favor the ZAR in emerging markets


The USD DXY has reached a turning point and we believe should weaken further for three reasons First the carry ad-vantage that helped the USD last year has now vanished and hedging costs have declined as a result This will decrease the appeal of previously higher yielding US assets and lower the hurdle for foreign investors to hedge back existing USD exposure Second the nascent global recovery and improving relative growth picture outside the USA are likely to weigh on the USD Third US fiscal balances are deteriorating signifi-cantly With the current account still in deficit and real rates likely to stay low we believe that the USD will be the main variable of adjustment to finance both fiscal and current ac-count deficits going forward The strong growth of the Federal Reserversquos balance sheet should cap USD upside risk in case of a flare-up in geopolitical tensions or a second wave of coronavirus infections

The EURrsquos appeal The European Central Bank has further expanded its quanti-tative program to support peripheral spreads Also the pro-posed French-German EU recovery fund has had a major impact on perceived EUR risk easing concerns over debt ldquomutualizationrdquo and the related risk of an EU ldquobreak uprdquo Lockdowns are easing across Europe which should allow economic activity to rebound more quickly than in the USA The recent relative improvement in business surveys (PMI) already favors the EUR over the USD We expect EURUSD at 118 in 3M and 120 in 12M In this context we believe

that EURCHF appreciation should lag EURUSD over time This is because foreign exchange (FX) interventions by the Swiss National Bank (SNB) have prevented a lower EURCHF We still believe that the SNBrsquos FX policy will re-main in place thus interventions remain possible if EU risks resurface We target EURCHF at 111 in 3M and 115 in 12M We also like the SEK NOK NZD as cheaply valued cyclical currencies against the USD

Favor the ZAR less so the TRY Emerging market (EM) currencies have benefited from im-provements in global risk sentiment A strong performance of fundamentally weaker currencies has lifted our EM FX risk sentiment index to the highest level in over a year We expect a higher degree of cross-country differentiation going forward The cyclical recovery in global activity and improving risk sentiment should lead to a visible pick-up in flows We turn positive on the ZAR to better reflect our constructive view on EM assets There have been notable improvements in South Africarsquos terms of trade and economic momentum relative to market expectations

At the same time we turn negative on the TRY as the fun-damental backdrop has deteriorated We believe that the deterioration of the trade balance and a low level of net FX reserves could undermine FX interventions We maintain our negative view on USDCNY and USDKRW but adjust our 3M and 12M targets to 695 and 690 as well as 1165 and 1145 respectively For most of the rest of USDAsia pairs we have lowered the 3M and 12M targets in line with the expected softer trend of the USD (12062020)


Forecasts

At a glance More information on the forecasts and estimates is available Credit Selected indices on request Past performance is not an indicator of future

Yield Spread Duration 3M TR 12M TR fore-performance Performance can be affected by commissions () (bp) (years) forecast cast fees or other charges as well as exchange rate fluctuations BC Global Aggregate 097 57 733 030 080

BC Global Treasuries 050 15 878 -050 -100

BC Global IG Corp 195 151 734 234 429 Short interest rates 3M Libor10-year government BC Global HY Corp 701 615 425 169 528 bonds

JPM EMBI Global Di- 554 467 719 143 570 3M Libor 10Y versified HC

in Spot 3M 12M Spot 3M 12M

CHF -066 -08 to -06 -08 to - -041 -02 -02 BC = Barclays Capital IG= Investment Grade JPM = JP Morgan (EMBI+) Index data as 1162020 Forecast as on 1162020 06 Source Bloomberg Credit SuisseIDC EUR -037 -05 to -03 -05 to - -043 -02 -02

03

USD 031 02 to 04 02 to 04 073 1 12 Foreign exchange

GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M

JPY -005 -01 to 01 -01 to 002 -01 0 EURUSD 113 118 120 01 USDCHF 095 094 096

EURCHF 107 111 115 Spot rates are closing prices as of 15062020 Forecast date 11062020 3M USDJPY 10721 10400 10000 Euribor 3M bank bill rates These forecasts are no reliable indicators of future perfor-

EURGBP 090 092 093 mance Source Bloomberg Credit SuisseIDC GBPUSD 126 128 129

AUDUSD 070 071 074

USDCAD 135 133 130

Equities EURSEK 1050 1020 1000

EURNOK 1075 1040 1030 Index Spot PE Div y 3M 12M () EURPLN 441 457 459

MSCI AC World 1311 192 27 1360 1420 USDCNY 707 695 690

US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134

Eurostoxx 50 3243 165 28 3340 3400 USDKRW 120643 116500 114500

UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450

Japan Topix 1593 162 24 1600 1630 USDBRL 524 490 600

Australia SampPASX 5942 194 41 6290 6400 USDMXN 2202 2200 2300

200

Switzerland SMI 10034 177 30 10400 10700 Spot rates are as of 1762020

MSCI Emerging Mar- 133285 139 31 138000 144000 Source BloombergIDC

kets

Prices as of 1662020 Forecast as on 1162020 Gross return (incl dividends) Real GDP growth and inflation Source Bloomberg Datastream Credit SuisseIDC GDP Inflation

growth

in 2019 2020 2021 2019 2020 2021 Commodities CH 09 -40 35 04 -07 03

Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19

Platinum (USDoz) 8179 900 900 Australia 20 -60 50 17 00 10

Palladium (USDoz) 1924 2000 1900 Japan 07 -39 10 06 -03 03

Copper (USDton) 5713 5900 6000 China 61 33 56 29 32 28

WTI Crude Oil (USDbbl) 374 38 43

Bloomberg Commodity index 1359 140 148 Forecast date 12062020 These forecasts are no reliable indicators of future per-formance Source Credit Suisse Spot rates are closing prices as of 1762020 forecast as on 1162020

Source Bloomberg Credit SuisseIDC (17062020)


Glossary

Risk warnings

Emerging markets Emerging markets are located in countries that possess one or more of the following characteristics a certain degree of political instability relatively unpredictable financial markets and economic growth patterns a financial market that is still at the development stage or a weak economy Emerging market investments usually result in higher risks as a result of political economic credit exchange rate market liquidity legal settlement market shareholder and creditor risks

Hedge funds Regardless of structure hedge funds are not limited to any particular investment discipline or trading strategy and seek to profit in all kinds of markets by using leverage derivative instruments and speculative investment strategies that may increase the risk of investment loss

Commodity investments Commodity transactions carry a high degree of risk and may not be suitable for many private investors The extent of loss due to market movements can be substantial or even result in a total loss

Real estate Investors in real estate are exposed to liquidity foreign currency and other risks including cyclical risk rental and local market risk as well as environmental risk and changes to the legal situation

Currency risks Investments in foreign currencies involve the additional risk that the foreign currency might lose value against the investorrsquos reference currency

Equity risk Equities are subject to market forces and hence fluctuations in value which are not entirely predictable

Market risk Financial markets rise and fall based on economic conditions inflationary pressures world news and business-specific reports While trends may be detected over time it can be difficult to predict the direction of the market and individual stocks This variability puts stock investments at risk of losing value

High Yield bond risk High Yield Bonds are typically rated below investment grade or are unrated and as such are often subject to a higher risk of issuer default

Perpetual Bond risk Perpetual Bonds have no maturity date and therefore the Interest pay-out depends on the viability of the issuer in the very long term

Subordinated Bond risk In case of liquidation of the issuer investors can only get back the principal after other senior creditors are paid

Risk of Bonds with variable deferral of interest terms Investors would face uncertainty over the amount and time of the interest payments to be received

Callable bond risk Investors face reinvestment risk when the issuer exercises its right to redeem the bond before it matures

Risk of Bonds with extendable maturity date Investors would not have a definite schedule of principal repayment

Convertible or exchangeable bond risk Investors are subject to both equity and bond investment risk

Cocos risk The bond may be written-off fully or partially or converted to common stock on the occurrence of a trigger event

Explanation of indices frequently used in reports

Index Comment

Australia SampPASX 200 SampPASX 200 is an Australian market-capitalization-weighted and float-adjusted stock index calculated by Standard and Poors

BC High Yield Corp USD The US Corporate High Yield Index measures USD-denominated non-investment grade fixed-rate and taxable corporate bonds The index is calculated by Barclays

BC High Yield Pan EUR The Euro Corporate Index tracks the fixed-rate investment-grade euro-denominated corporate bond market The index includes issues that meet specified maturity liquidity and quality requirements The index is calculated by Barclays

BC IG Corporate EUR The US Corporate Index tracks the fixed-rate investment-grade dollar-denominated corporate bond market The index includes both US and non-US issues that meet specified maturity liquidity and quality requirements The index is calculated by Barclays

BC IG Corporate USD The IG Financials Index tracks the fixed-rate investment-grade dollar-denominated financials bond market The index includes both US and non-US issues that meet specified maturity liquidity and quality requirements The index is calculated by Barclays

Canada SampPTSX comp The SampPTSX composite index is the Canadian equivalent of the SampP 500 Index in the USA The index contains the largest stocks traded on the Toronto Stock Exchange

Consumer Confidence Indices Consumer Confidence Indices (CCIs) are based on surveys of consumers spending intentions and economic situations as well as their concerns and expectations for the immediate future

CS Hedge Fund Index The Credit Suisse Hedge Fund Index is compiled by Credit Suisse Hedge Index LLC It is an asset-weighted hedge fund index and includes only funds as opposed to separate accounts The index reflects performance net of all hedge fund component performance fees and expenses

CS LSI ex govt CHF The Liquid Swiss Index ex govt CHF is a market-capitalized bond index representing the most liquid and tradable portion of the Swiss bond market excluding Swiss government bonds The index is calculated by Credit Suisse

DAX The German Stock Index stock represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange

DXY A measure of the value of the US dollar relative to the majority of its most important trading partners The US Dollar Index is similar to other trade-weighted indices which also use the exchange rates from the same major currencies

Eurostoxx 50 Eurostoxx 50 is a market-capitalization-weighted stock index of 50 leading blue-chip companies in the Eurozone

FTSE EPRANAREIT Global Real Estate Index Series The FTSE EPRANAREIT Global Real Estate Index Series is designed to represent general trends in eligible real estate equities worldwide

Hedge Fund Barometer The Hedge Fund Barometer is a proprietary Credit Suisse scoring tool that measures market conditions for hedge fund strategies It comprises four components liquidity volatility systemic risks and business cycle

Japan Topix TOPIX also known as the Tokyo Stock Price Index tracks all large Japanese companies listed in the stock exchanges first section The index calculation excludes temporary issues and preferred stocks

JPM EM hard curr USD The Emerging Market Bond Index Plus tracks the total return of hard-currency sovereign bonds across the most liquid emerging markets The index encompasses US-denominated Brady bonds (dollar-denominated bonds issued by Latin American countries) loans and Eurobonds

JPM EM local curr hedg USD The JPMorgan Government Bond Index tracks local currency bonds issued by emerging market governments across the most accessible markets for international investors


MSCI AC AsiaPacific The MSCI All Country Asia Pacific Index captures large and mid cap representation across 5 developed market countries and 8 emerging markets countries in the Asia Pacific region With 1000 constituents the index covers approximately 85 of the free float-adjusted market capitalization in each country

MSCI AC World The MSCI All Country World Index captures large and mid cap representation across 23 developed markets and 23 emerging market countries With roughly 2480 constituents the index covers around 85 of the global investable equity opportunity set

MSCI Emerging Markets MSCI Emerging Markets is a free-float-weighted Index designed to measure equity market performance in global emerging markets The index is developed and calculated by Morgan Stanley Capital International

MSCI EMU The MSCI EMU Index (European Economic and Monetary Union) captures large and mid cap representation across the 10 Developed Markets countries in the EMU With 237 constituents the index covers approximately 85 of the free float-adjusted market capitalization of the EMU

MSCI Europe The MSCI Europe Index captures large and mid cap representation across 15 developed markets countries in Europe With 442 constituents the index covers approximately 85 of the free float-adjusted market capitalization across the European developed markets equity universe

MSCI UK The MSCI United Kingdom Index is designed to measure the performance of the large and mid cap segments of the UK market With 111 constituents the index covers approximately 85 of the free float-adjusted market capitalization in the UK

MSCI World MSCI World is an index of global equity markets developed and calculated by Morgan Stanley Capital International Calculations are based on closing prices with dividends reinvested

OECD Composite Leading Indicators OECD Composite Leading Indicators (CLIs) are designed to provide early signals of turning points in business cycles with components that measure early stages of production respond to changes in economic activity and are sensitive to expectations of future activity

Purchasing Managers Indices Purchasing Managers Indices (PMIs) are economic indicators derived from monthly surveys of private-sector companies The two principal producers of PMIs are Markit Group which conducts PMIs for over 30 countries worldwide and the Institute for Supply Management (ISM) which conducts PMIs for the United States The indices include additional sub-indices for manufac-turing surveys such as new orders employment exports stocks of raw materials and finished goods prices of inputs and finished goods and services

Russell 1000 Growth Index The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the US equity universe based on 1000 large-cap companies with higher price-to-book ratios and higher forecast growth values

Russell 1000 Index The Russell 1000 Index is a stock market index that represents the highest-ranking 1000 stocks in the Russell 3000 Index (encompassing the 3000 largest US-traded stocks with the underlying companies all incorporated in the USA) and representing about 90 of the total market capitalization of that index The Russell 1000 Index has a weighted average market capitalization of USD 81 billion and the median market capitalization is approximately USD 46 billion

Russell 1000 Value Index The Russell 1000 Value Index measures the performance of the large-cap value segment of the US equity universe based on 1000 large-cap companies with lower price-to-book ratios and lower expected growth values

Switzerland SMI The Swiss Market Index is made up of 20 of the largest companies listed of the Swiss Performance Index universe It represents 85 of the free-float capitalization of the Swiss equity market As a price index the SMI is not adjusted for dividends

UK FTSE 100 FTSE 100 is a market-capitalization-weighted stock index that represents 100 of the most highly capitalized companies traded on the London Stock exchange The equities have an investibility weighting in the index calculation

US SampP 500 Standard and Poors 500 is a capitalization-weighted stock index representing all major industries in the USA which measures the performance of the domestic economy through changes in the aggregate market value

Abbreviations frequently used in reports

Abb Description Abb Description

3612 MMA 3612 month moving average IMF International Monetary Fund

AI Alternative investments LatAm Latin America

APAC Asia Pacific Libor London interbank offered rate

bbl barrel m bd Million barrels per day

BI Bank Indonesia M1 A measure of the money supply that includes all physical money such as coins and currency as well as demand deposits checking accounts and negotiable order of withdrawal accounts

BoC Bank of Canada M2 A measure of money supply that includes cash and checking deposits (M1) as well as savings deposits money market mutual funds and other time deposits

BoE Bank of England M3 A measure of money supply that includes M2 as well as large time deposits institutional money market funds short-term re-purchase agreements and other larger liquid assets

BoJ Bank of Japan MampA Mergers and acquisitions

bp Basis points MAS Monetary Authority of Singapore

BRIC Brazil Russia China India MLP Master Limited Partnership

CAGR Compound annual growth rate MoM Month-on-month

CBOE Chicago Board Options Exchange MPC Monetary Policy Committee

CFO Cash from operations OAS Option-adjusted spread

CFROI Cash flow return on investment OECD Organisation for Economic Co-operation and Development

DCF Discounted cash flow OIS Overnight indexed swap

DM Developed Market OPEC Organization of Petroleum Exporting Countries

DMs Developed Markets PB Price-to-book value

EBITDA Earnings before interest taxes depreciation and amortization PE Price-earnings ratio

ECB European Central Bank PBoC Peoples Bank of China

EEMEA Eastern Europe Middle East and Africa PEG PE ratio divided by growth in EPS

EM Emerging Market PMI Purchasing Managers Index

EMEA Europe Middle East and Africa PPP Purchasing power parity


EMs Emerging Markets QE Quantitative easing

EMU European Monetary Union QoQ Quarter-on-quarter

EPS Earnings per share rhs right-hand side (for charts)

ETF Exchange traded funds RBA Reserve Bank of Australia

EV Enterprise value RBI Reserve Bank of India

FCF Free cash flow RBNZ Reserve Bank of New Zealand

Fed US Federal Reserve REIT Real estate investment trust

FFO Funds from operations ROE Return on equity

FOMC Federal Open Market Committee ROIC Return on invested capital

FX Foreign exchange RRR Reserve requirement ratio

G10 Group of Ten SAA Strategic asset allocation

G3 Group of Three SDR Special drawing rights

GDP Gross domestic product SNB Swiss National Bank

GPIF Government Pension Investment Fund TAA Tactical asset allocation

HC Hard currency TWI Trade-Weighted Index

HY High yield VIX Volatility Index

IBD Interest-bearing debt WTI West Texas Intermediate

IC Credit Suisse Investment Committee YoY Year-on-year

IG Investment grade YTD Year-to-date

ILB Inflation-linked bond Personal Consumption An indicator of the average increase in prices for all domestic Expenditure (PCE defla- personal consumption tor)

Currency codes frequently used in reports

Code Currency Code Currency

ARS Argentine peso KRW South Korean won

AUD Australian dollar MXN Mexican peso

BRL Brazilian real MYR Malaysian ringgit

CAD Canadian dollar NOK Norwegian krone

CHF Swiss franc NZD New Zealand dollar

CLP Chilean peso PEN Peruvian nuevo sol

CNY Chinese yuan PHP Philippine peso

COP Colombian peso PLN Polish złoty

CZK Czech koruna RUB Russian ruble

EUR Euro SEK Swedish kronakronor

GBP Pound sterling SGD Singapore dollar

HKD Hong Kong dollar THB Thai baht

HUF Hungarian forint TRY Turkish lira

IDR Indonesian rupiah TWD New Taiwan dollar

ILS Israeli new shekel USD United States dollar

INR Indian rupee ZAR South African rand

JPY Japanese yen

Important information on derivatives

Pricing Option premiums and prices mentioned are indicative only Option premiums and prices can be subject to very rapid changes The prices and premiums mentioned are as of the time indicated in the text and might have changed substantially in the meantime

Risks Derivatives are complex instruments and are intended for sale only to investors who are capable of understanding and assuming all the risks involved Investors must be aware that adding option positions to an existing portfolio may change the characteristics and behavior of that portfolio substantially A portfoliorsquos sensitivity to certain market moves can be heavily impacted by the leverage effect of options

Buying calls Investors who buy call options risk the loss of the entire premium paid if the underlying security trades below the strike price at expiration

Buying puts Investors who buy put options risk loss of the entire premium paid if the underlying security finishes above the strike price at expiration

Selling calls Investors who sell calls commit themselves to sell the underlying for the strike price even if the market price of the underlying is substantially higher Investors who sell covered calls (own the underlying security and sell a call) risk limiting their upside to the strike price plus the upfront premium received and may have their security called away if the security price exceeds the strike price of the short call Additionally the investor has full downside participation that is only partially offset by the premium received upfront If investors are forced to sell the underlying they might be subject to taxing Investors shorting naked calls (ie selling calls but without holding the underlying security) risk unlimited losses of security price less strike price

Selling puts Put sellers commit to buying the underlying security at the strike price in the event the security falls below the strike price The maximum loss is the full strike price less the premium received for selling the put

Buying call spreads Investors who buy call spreads (buy a call and sell a call with a higher strike) risk the loss of the entire premium paid if the underlying trades below the lower strike price at expiration The maximum gain from buying call spreads is the difference between the strike prices less the upfront premium paid


Selling naked call spreads Selling naked call spreads (sell a call and buy a farther out-of-the-money call with no underlying security position) Investors risk a maximum loss of the difference between the long call strike and the short call strike less the upfront premium taken in if the underlying security finishes above the long call strike at expiration The maximum gain is the upfront premium taken in if the security finishes below the short call strike at expiration

Buying put spreads Investors who buy put spreads (buy a put and sell a put with a lower strike price) also have a maximum loss of the upfront premium paid The maximum gain from buying put spreads is the difference between the strike prices less the upfront premium paid

Buying strangles Buying strangles (buy put and buy call) The maximum loss is the entire premium paid for both options if the underlying trades between the put strike and the call strike at expiration

Selling strangles or straddles Investors who are long a security and short a strangle or straddle risk capping their upside in the security to the strike price of the call that is sold plus the upfront premium received Additionally if the security trades below the strike price of the short put investors risk losing the difference between the strike price and the security price (less the value of the premium received) on the short put and will also experience losses in the security position if they owns shares The maximum potential loss is the full value of the strike price (less the value of the premium received) plus losses on the long security position Investors who are short naked strangles or straddles have unlimited potential loss since if the security trades above the call strike price investors risk losing the difference between the strike price and the security price (less the value of the premium received) on the short call In addition they are obligated to buy the security at the put strike price (less upfront premium received) if the security fin-ishes below the put strike price at expiration


Important information on mutual funds Fees and charges etc Different types of fees and commissions (subscription fee amount which must be retained in trust assets repurchase fee etc) are charged when investment trustsfunds are purchased and sold In addition apart from these fees and commissions trust and management fees and other fees (audit fee trust administrative charges carried interest etc) are charged and borne by you through your trust asset Fees and commissions borne by you will be a sum of these amounts Such fees and commissions vary depending on the investment trustfund and depending on the investment status and therefore we cannot provide specific amounts or calculation methods

For detailed information on fees and commissions etc of each re-spective investment trustfund please refer to the pre-contract documents (prospectus and other supplementary documents)

Important information on dividends bull Dividends are different to interest on deposits and are paid from the net asset value of investment trustsfunds Therefore when dividends are paid the base value (net asset value per unit) will decrease by an amount equivalent to the amount paid

bull Dividends may be paid exceeding the profit earned during the calculation period (trading profit including profits of dividends etc after expenses) In this case the base value (net asset value per unit) on the settlement date in this period will decrease compared to that on the settlement date in the previous period Also the level of dividends does not always reflect the rate of return for the investment trustfund during the calculation period

bull A part or all of dividends may be virtually equivalent to some repayment of the principal depending on the purchase price of the investment trustfund by an investor The same can be applied to a case that an increase in the base value (net asset value per unit) is smaller than a dividend amount due to the investment status after purchase of the investment trustfund

Please refer to the prospectus for details

Explanation of major risks (description pursuant to Ar-ticle 37 (Regulation on Advertising etc) of the Financial Instruments and Exchange Act etc) The risks described below are a summary of some general risks of investment trustsfunds (risks which have an impact on net asset value) and do not cover all risks Please refer to the pre-trade documents (prospectus and other supplementary documents)

Price volatility risk Investment trustsfunds invest mainly in equities bonds and derivative products etc The value of the investment trustfund will go up or down due to increases or decreases in the prices of such investments Further the value of such investments will be impacted by political and economic factors the financial standing of an issuer market demand and supply interest rates and other factors

Foreign currency risk Investment trustsfunds which invest in equities or bonds etc denominated in foreign currencies entail a foreign currency risk and the base value (or net asset value) of investment trustsfunds may change depending on the currency exchange rate Even when you do not experience a loss of invest-ment principal when calculated in the base currency you may suffer a loss at conversion into Japanese yen due to fluctuations in exchange rates Fur-thermore investment trustsfunds which utilize currency trading among multiple currencies may incur costs due to such currency trading depending on the difference in short-term interest rates between the currencies and you may suffer a loss

Credit risk For investment trustsfunds which invest in equities or bonds etc the prices of these investments may increase and decrease due to changes in the business or financial standing of the issuer and other factors and you may suffer a loss

Risk pertaining to liquidity Where there is sudden high volume in a particular investment or when sudden changes in the external environment surrounding markets triggers a sudden downturn in a market or period of market turmoil etc investments may not be flexibly traded In such a case a decline in the price of the investment may impact the base value (or net asset value) of the investment trust result-ing in a loss Further the management company may decide to stop calcu-lation of net asset prices or suspend sell or redemption claims

In addition for certain types of investment trustfund there is a risk that particular investments may be designated to a separate account (or side pocket) due to a lack of liquidity When a separate account is utilized by in-vestment trustsfunds restrictions may apply as to when such investments can be liquidated through a sell or redemption claim and there may be a re-striction in the timing or form of redemption claim permissible In particular for Fund of Fund investments when an investment trustfund makes an in-vestment without time limit in another fund the investment trustfund may be influenced by investment results in the other funds

Risk associated with an outflow of money received from sales orders When there is a large volume of sale orders in a short period of time the investment trustfund may be forced to sell structured securities at a lower rate than the prevailing market price to refund monies to investors and as a result you may suffer a loss Also alternative investment trustsfunds gen-erally have a limitation in selling or cashing out the investment compared to traditional investment trustsfunds Many alternative investment trustsfunds only accept a sell or redemption order on a monthly or quarterly basis and therefore you may not be able to rapidly exit the investment in for example times of economic uncertainty

Redemption risk Investment trustsfunds may become subject to mandatory redemption due to a certain reason For details please refer to the pre-trade documents (prospectus and other supplementary documents) before subscription

Concentration risk Investment trustsfunds which invest in a certain investment product or similar investment product group may significantly decrease in value (net asset value) under severe market circumstances

Country risk When changes in political economic and social conditions in investment destination countries and regions cause a dislocation in financial and security markets security prices may significantly change Also investments in emerging markets involve unique risks including small market size and trade volume political and social uncertainties undeveloped market infrastructure such as a clearing system undeveloped information disclosure system and legal system by supervising authorities large fluctuations in exchange rates restrictions on currency remittance to foreign countries and other factors and therefore may have larger price fluctuations compared to investments in major developed markets

Important information on non-Japanese stocks Please refer to the issuer information when you purchase non-Japanese stocks

Disclaimer This material is published solely for information purposes and is intended for the recipientrsquos sole use Credit Suisse does not represent or warrant its ac-curacy or completeness The material is not directly or indirectly intended for any investment solicitation and does not constitute an invitation or offer to conclude a transaction contract for financial instruments etc Credit Suisse accepts no liability for loss arising from the use of the information in this material It is recommended that you consult with the third party professional advisors as to legal or tax issues etc This material should not be reproduced or quoted without the prior express written consent of Credit Suisse The information and opinions expressed in this material were produced by Private Banking Division at Credit Suisse as of the date of writing and are subject to change without notice Views expressed in respect of particular investment products in this material may be different from or inconsistent with the ob-


servations and views of other divisions besides Private Banking due to the differences in evaluation criteria This material is solely distributed in Japan by Credit Suisse Securities (Japan) Limited Credit Suisse Securities (Japan) Limited will not distribute or forward it outside Japan

You may incur a loss as a result of fluctuations in stock prices if you invest in stocks In relation to foreign stocks you may incur a loss in such stocks due to foreign exchange rate fluctuations etc The market value of bonds is affected by interest rate fluctuations or changes in the financial standing of any issuer etc as such you may incur a loss if you sell such bonds before they are redeemed In relation to foreign bonds you may incur a loss in such bonds due to foreign exchange rate fluctuations etc The net asset value of mutual funds can fall as well as rise due to price changes of underlying stocks bonds etc and foreign exchange rate fluctuations and this may cause you to incur a loss

Structured securities and derivatives are complex instruments typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved The market value of any structured security or transaction may be affected by changes in financial market conditions reference indices volatility and the credit quality of any issuer or reference issuer

Furthermore there are structured securities on which you may incur a loss since the redemption amounts are linked with fluctuations in reference indices etc There are also derivatives on which potential losses may exceed the amount of the initial investment Commission rates for any transactions will be as per the rates agreed between Credit Suisse and you For transactions conducted on a principal to principal basis between Credit Suisse and you the purchase or sale price will be the total consideration Transactions con-

ducted on a principal to principal basis including over the counter derivatives transactions will be quoted as a purchasebid price or selloffer price and for which a difference or spread may exist Charges in relation to transactions will be agreed prior to dealing as per our requirements under the Financial Instruments and Exchange Law

By purchasing financial instruments etc you may incur a loss or a loss in excess of the principal as a result of fluctuations in market prices or other financial indices etc Please read carefully the Pre-Contract Documentation provided for an explanation of associated risks and commissions etc of individual financial instruments etc prior to purchase Please contact your Relationship Manager if you have any questions

UNITED STATES NEITHER THIS REPORT NOR ANY COPY THEREOF MAY BE SENT TAKEN INTO OR DISTRIBUTED IN THE UNITED STATES OR TO ANY US PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE US SECURITIES ACT OF 1933 AS AMENDED)

Credit Suisse Securities (Japan) Limited Financial Instruments Dealer Di-rector-General of Kanto Local Finance Bureau (Kinsho) No 66 a member of Japan Securities Dealers Association Financial Futures Association of Japan Japan Investment Advisers Association Type II Financial Instruments Firms Association

Copyright copy 2020 Credit Suisse Group AG andor its affiliates All rights reserved

20C013A_IS_J


Imprint

Publisher Credit Suisse Private Banking amp Wealth Management Investment Solutions amp Products

Information about other Investment Solutions amp Products publications Internet httpsinvestmentcredit-suissecom

Intranet (for employees only) httpsisrcsintranet

Subscription (clients) Please contact your customer advisor to subscribe to this publication

Subscription (internal) For information on subscriptions please visit httpisrcsintranetsubscriptions


Editorial

Michael Strobaek Global Chief Investment Officer

Burkhard Varnholt Chief Investment Officer ndash Swiss Univer-sal Bank

The resilience we highlighted last month has been on full display over the last few weeks Despite a very recent pullback in US equities markets have broadly rallied as many investors left the sidelines amid worries that they might miss out As a result many equity indices have managed to recoup a signif-icant part and in some cases all of their year-to-date losses

The moderate equity overweight we have had in portfolios since late March has of course helped us to benefit from this strong rebound Nevertheless in the Investment Commit-tee we critically assess our House View regularly particularly after such a successful stretch Temporary setbacks are possible but we retain our risk asset exposure and remain overweight equities and credits in portfolios for now We be-lieve that the substantial fiscal and monetary stimulus the lack of alternatives for yield-seeking investors amid very low interest rates and the inclusion of lower-rated corporate bonds in central banksrsquo asset purchase programs should un-lock further upside in the medium term We also remain overweight commodities particularly energy which should benefit from the expected rebound in economic activity as countries emerge from the ldquogreat global pauserdquo forced by the lockdowns

Mindful of potential risks we are keeping a close eye on factors such as infection numbers signs of investor exuber-ance and political developments In this context one of our special topic articles looks at how financial markets and poli-tics interact and explains what it takes for the latter to impact markets Separately we analyze whether investors should worry about the effect of the coronavirus crisis on inflation

We hope the pages ahead provide valuable guidance for your investment decisions

In this issue

Japan investment strategy 3 Equity and credit remain attractive

Japan asset allocation 6 Maintain outperform on equities and credit

Investment themes and solutions 8 Anxious societies ndash inclusive capitalism Investment solutions

Economics 10 Global growth has troughed

Global investment strategy 11 USD loses its appeal

Special topic 12 How politics and markets interact

Special topic 13 What happens to inflation

Fixed income 14 Credit remains attractive

Equities 15 Recovery is broadening

Alternative investments 17 Oil set for a pause

Foreign exchange 18 Dollar peaks

Forecasts 19 At a glance

Editorial deadline 17 June 2020






























(17062020)









(16062020)



mark


Liquidity 20 15 -05 -30 -35 50

JPY 20 15 -05 -30 -35 50

Fixed income 475 475 00 00 00 475

JPY 25 25 00 -15 -15 40

Global Corporates

Global High Yield


Emerging Markets LC

Global Convertibles

350

35

40

25

00

350

35

40

25

00

00

00

00

00

00

05

05

10

-05

00

05

05

10

-05

00

345

30

30

30

00 Equity

Japan

435

160

440

160

05

00

10

-05

15

-05

425

165

World (ex Japan) 275 280 05 15 20 260

Switzerland 15 15 00 10 10 05

Euro Zone 25 30 05 00 05 25

North America 125 125 00 00 00 125


Australia 05 05 00 00 00 05


LatAm 00 00 00 00 00 00

APAC 25 25 00 00 00 25

EMEA 05 05 00 00 00 05

Supertrend 60 60 00 00 00 60


Angry Society 20 20 00 00 00 20


Real Estate 25 25 00 00 00 25

Commodities 45 45 00 20 20 25

Gold 00 00 00 00 00 00 Total 1000 1000 00 00 00 1000












Supertrends


































Economics
























(15062020)


Special topic










(12062020)


Special topic











-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy


(11062020)


Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint



































(17062020)









(16062020)



mark


Liquidity 20 15 -05 -30 -35 50

JPY 20 15 -05 -30 -35 50

Fixed income 475 475 00 00 00 475

JPY 25 25 00 -15 -15 40

Global Corporates

Global High Yield


Emerging Markets LC

Global Convertibles

350

35

40

25

00

350

35

40

25

00

00

00

00

00

00

05

05

10

-05

00

05

05

10

-05

00

345

30

30

30

00 Equity

Japan

435

160

440

160

05

00

10

-05

15

-05

425

165

World (ex Japan) 275 280 05 15 20 260

Switzerland 15 15 00 10 10 05

Euro Zone 25 30 05 00 05 25

North America 125 125 00 00 00 125


Australia 05 05 00 00 00 05


LatAm 00 00 00 00 00 00

APAC 25 25 00 00 00 25

EMEA 05 05 00 00 00 05

Supertrend 60 60 00 00 00 60


Angry Society 20 20 00 00 00 20


Real Estate 25 25 00 00 00 25

Commodities 45 45 00 20 20 25

Gold 00 00 00 00 00 00 Total 1000 1000 00 00 00 1000












Supertrends


































Economics
























(15062020)


Special topic










(12062020)


Special topic











-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy


(11062020)


Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint














(16062020)



mark


Liquidity 20 15 -05 -30 -35 50

JPY 20 15 -05 -30 -35 50

Fixed income 475 475 00 00 00 475

JPY 25 25 00 -15 -15 40

Global Corporates

Global High Yield


Emerging Markets LC

Global Convertibles

350

35

40

25

00

350

35

40

25

00

00

00

00

00

00

05

05

10

-05

00

05

05

10

-05

00

345

30

30

30

00 Equity

Japan

435

160

440

160

05

00

10

-05

15

-05

425

165

World (ex Japan) 275 280 05 15 20 260

Switzerland 15 15 00 10 10 05

Euro Zone 25 30 05 00 05 25

North America 125 125 00 00 00 125


Australia 05 05 00 00 00 05


LatAm 00 00 00 00 00 00

APAC 25 25 00 00 00 25

EMEA 05 05 00 00 00 05

Supertrend 60 60 00 00 00 60


Angry Society 20 20 00 00 00 20


Real Estate 25 25 00 00 00 25

Commodities 45 45 00 20 20 25

Gold 00 00 00 00 00 00 Total 1000 1000 00 00 00 1000












Supertrends


































Economics
























(15062020)


Special topic










(12062020)


Special topic











-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy


(11062020)


Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint








mark


Liquidity 20 15 -05 -30 -35 50

JPY 20 15 -05 -30 -35 50

Fixed income 475 475 00 00 00 475

JPY 25 25 00 -15 -15 40

Global Corporates

Global High Yield


Emerging Markets LC

Global Convertibles

350

35

40

25

00

350

35

40

25

00

00

00

00

00

00

05

05

10

-05

00

05

05

10

-05

00

345

30

30

30

00 Equity

Japan

435

160

440

160

05

00

10

-05

15

-05

425

165

World (ex Japan) 275 280 05 15 20 260

Switzerland 15 15 00 10 10 05

Euro Zone 25 30 05 00 05 25

North America 125 125 00 00 00 125


Australia 05 05 00 00 00 05


LatAm 00 00 00 00 00 00

APAC 25 25 00 00 00 25

EMEA 05 05 00 00 00 05

Supertrend 60 60 00 00 00 60


Angry Society 20 20 00 00 00 20


Real Estate 25 25 00 00 00 25

Commodities 45 45 00 20 20 25

Gold 00 00 00 00 00 00 Total 1000 1000 00 00 00 1000












Supertrends


































Economics
























(15062020)


Special topic










(12062020)


Special topic











-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy


(11062020)


Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint
















Supertrends


































Economics
























(15062020)


Special topic










(12062020)


Special topic











-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy


(11062020)


Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint







Economics
























(15062020)


Special topic










(12062020)


Special topic











-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy


(11062020)


Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint


















(15062020)


Special topic










(12062020)


Special topic











-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy


(11062020)


Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint







Special topic










(12062020)


Special topic











-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy


(11062020)


Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint







Special topic











-2

0

2

4

6

8

10

12

14

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2020

Euro area M3 yy


(11062020)


Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint







Fixed income









Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint







Equities















Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint












Macau+





















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint

















Foreign exchange










Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint







Forecasts








03


GBP 020 01 to 03 01 to 03 021 03 05

AUD 010 00 to 02 00 to 02 090 08 07 Spot 3M 12M




AUDUSD 070 071 074

USDCAD 135 133 130




US SampP 500 3125 219 23 3240 3320 USDSGD 139 138 134


UK FTSE 100 6243 161 45 6480 6570 USDINR 7621 7500 7450



200



kets


growth


Spot 3M 12M EMU 12 -85 81 12 02 05

Gold (USDoz) 1726 1800 1850 USA 23 -56 35 18 07 16

Silver (USDoz) 174 19 19 UK 14 -92 83 18 12 19








Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint







Glossary

Risk warnings

















Index Comment

































































































JPY Japanese yen











































20C013A_IS_J


Imprint





















































































JPY Japanese yen











































20C013A_IS_J


Imprint








































20C013A_IS_J


Imprint







Imprint







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