1

For professional clients only

HSBC GIF Turkey Equity PresentationSeptember 2011

2

HSBC Overview

HSBC Global Asset Management

The Investment Team & Emerging Markets Investment Resources

Investment Philosophy and Process

Risk management

Market overview

HSBC GIF Turkey Equity Fund overview

Competitor analysis

Outlook

Appendix

Contents

HSBC Overview

4

HSBC overview

Emerging markets are at the heart of HSBC's corporate identity

HSBC’s roots were formed in China and India in the 19th century

HSBC Group has maintained a strong presence in global trade, particularly in India and China, the world's most dynamic emerging markets.

Headquartered in London, HSBC is one of the largest banking and financial services organisations in the world, with over 300,000 employees spanning

an international network of around 7,500 offices in the Asia-Pacific region, Europe, the Americas, the Middle East and Africa.

One of the largest global financial services networks with offices in 87 countries of which 54 are in emerging market countries

A unique local market knowledge, enhancing the portfolio management processes

Direct access to local companies and investment opportunities

Source: HSBC Holdings Plc, data as of 31st December 2010.

5

Mexico

Honduras

El Salvador Nicaragua

Costa Rica Panama

Colombia

PeruBrazil

ParaguayChile

ArgentinaUruguay

South Africa

Mauritius

Algeria

Libya Egypt

PolandCzech RepublicSlovakia

TurkeyLebanon

IsraelPalestine

Georgia

ArmeniaIraq

KuwaitBahrain, QatarUAE

OmanSaudi Arabia

Kazakhstan

Russia

PakistanChina Korea

India

MaldivesSri Lanka

Taiwan

Philippines

Indonesia

BruneiMalaysia

Singapore

Hong Kong

ThailandVietnam

Macau

Malta

HSBC Global Asset ManagementHSBC Holdings plc

Source: HSBC Global Asset Management, as of 31 December 2010

HSBC’s presence in emerging markets

HSBC Global Asset Management

7

HSBC Global Asset Management

HSBC Global Asset Management is a leading global asset management firm managing assets totalling USD453.4 billion at the end of June 2011.

HSBC Global Asset Management offers clients around the world a diverse and full range of active and quantitative investment products including equity, fixed income, liquidity and alternative strategies.

Worldwide client base invested in both segregated accounts and pooled funds.

HSBC Global Asset Management is part of HSBC Holdings plc.

8

HSBC Global Asset Management -

A leader in emerging markets

Complete investment solutions including equity, fixed income, balanced and alternatives products through:

-

Local strategies: Products managed and distributed locally

-

Global, regional and single country strategies: Products managed

across multiple geographies and distributed globally

An extensive range of emerging markets funds, including some of the world's largest in their sectors

-

One of the largest offshore managers of Brazil, India and BRIC equity funds

-

Our flagship global emerging market products have made us leaders in the management of assets in a wide array of emerging markets, not only in Brazil, India and China but also in Taiwan, Thailand and Turkey

Emerging Markets AUM by region (US$ billion)

Source: HSBC Global Asset Management, Assets under management data as of 30th June 2011

Emerging Markets AUM by asset class (US$ billion)

Among the largest managers of emerging market funds globally, with approximately USD139 billion in assets under management and over 200 dedicated emerging markets investment professionals in 14 key locations

Latin America

58.9

Asia Pacific61.1

EMEAMENA

9.9Global

9.2

Equity39.9

Fixed Income

76.3

Balanced17.3

Alternative0.8

Liquidity4.8

The Investment Team & Emerging Markets Investment Resources

10

A team of Turkey specialists Talented portfolio managers led by a seasoned CIO…

… supported by experienced analysts and a well-respected Chief Economist and also by risk managers who are in good coordination with global risk function.

… supported by experienced analysts and a well-respected Chief Economist and also by risk managers who are in good coordination with global risk function.

Discretionary PortfolioManagement

İlker Ardal

15/3

Risk ManagementÇağdaş

Hatinoğlu

4/4Ahmet Perilioğlu 4/1

General ManagerNamık Aksel 17/6

Macroeconomists

Murat Ülgen / Chief Economist 12/4Melis Metiner

/ Economist 4/1

Company AnalystsCenk Orçan

12/9Bülent Yurdagül 12/10Tamer Şengün 6/2Erol Hullu 4/2Levent Bayar 3/3

Fixed IncomeÇağrı

Özel 10/10Cengiz Yılmaz

4/1Serkan

Saraç

5/3

Equity & Alternative Inv.Ercan Guner 16/2Bülent Ülke

15/1Osman

Yılmaz 4/2Bahar Kavaklıoğlu

3/1

Chief Investment OfficerOmer Gencal

19/2

Source: HSBC – December 2010 - X/X: Years of industry experience / Years at HSBC

11

New YorkGEM Fixed Income8 Investmentprofessionals

Mexico CityMexican Fixed IncomeMexican EquityMexican Alternatives11 Investmentprofessionals

BogotaColombian Fixed IncomeColombian Equity5 Investmentprofessionals

Sao PauloBrazilian Fixed IncomeBrazilian EquityBrazilian AlternativesBrazilian Multimanager21 Investmentprofessionals

Buenos AiresArgentinian Fixed IncomeArgentinian Equity5 Investmentprofessionals

LondonGEM EquityGEM AlternativesGEM Multimanager13 Investmentprofessionals

ParisGEM Fixed IncomeGEM Equity (inc Amanah)9 Investmentprofessionals

IstanbulTurkish Fixed IncomeTurkish EquityTurkish Alternatives10 Investmentprofessionals

RiyadhSaudi Fixed Income (inc

Amanah)Saudi EquitySaudi Alternatives18 Investmentprofessionals

Mumbai Indian Fixed Income Indian Equity19 Investmentprofessionals

SingaporeSingaporean Equity7 Investmentprofessionals

Hong KongHong Kong Fixed IncomeHong Kong EquityHong Kong Alternatives37 Investmentprofessionals

Shanghai Jintrust Chinese Fixed

Income Jintrust Chinese EquityChinese M ultimanager17 Investmentprofessionals

TaipeiTaipei Fixed IncomeTaipei Equity23 Investmentprofessionals

19464

Emerging markets investment capabilities –

A portfolio of opportunities Strategies and locations

As of June 2011

Investment Philosophy and Process

13

Investment Strategy

Investment Objective

The fund seeks long term returns from capital growth and income by investing in equity and equity equivalent securities of companies which have their registered office in and with an official listing on a major exchange of Turkey

Asset Allocation

Weight of equities in total assets can not be lower than two thirds of its non-cash assets in equity. Usually fully invested in stocks, with a minor cash allocation

Number of Stocks

The strategy is to diversify the portfolio between a minimum of 20 stocks to up to 40 stocks

Exposure

For the purpose of efficient portfolio management the fund may also invest in index futures to gain market exposure

Currency

The fund invests in Turkish Lira denominated assets, and the currency risk is unhedged

14

Investment Strategy (continued)

The objective is to maximize the return with a minimum deviation

from the comparative index: tracking error targets*

Aim to consistently deliver a minimum of market return (beta) plus a reasonable excess return (alpha) is the key to our investment philosophy.

The same philosophy is applied to the portfolio construction process for optimum combination of alpha and beta components of the fund. Significant portion of the portfolio is invested in selected at least 10 “most promising”

stocks and the remaining part is usually invested in a way of benchmark replication to keep the fund returns in tracking error targets.

As our fund management and research team is specialised on Turkey, a bottom up approach is the key element of our stock selection process

However, to some extent our quantitative trading models also make contribution to the performance

Source: HSBC - * For illustrative purpose only as the fund has no official benchmark

15

Stock Picking Process

Investment Universe: We have a list of 90 investable stocks (updated by the research, fund management, risk and internal control teams) out of the 347 listed on the Istanbul Stock Exchange

Investment Universe of 90 stocks is reduced to 40 most preferred

stocks through:-

Liquidity Screening-

Bottom Up Research and Valuation Focus-

Market Direction and Expectations-

Stocks That Promise the Highest Upside Potential

The stock selection process is finalized with 10 top picks selected among 40 most preferred stocks at Stock Selection Committee through :-

Analysis of Sectoral Trends, Company Stories and News-flow-

Flow Analysis-

Quantitative and Technical Analysis

Source: HSBC

16

Committees & Meetings

Daily Portfolio Managers Meeting:

Meeting is held everyday before market opening. Daily evolution of markets, news and company specific information is discussed.

Members: CIO and Portfolio Managers

Strategy Committee:

Committee meets every Friday after markets are closed. Macroeconomic outlook, expectations and political scenarios are discussed. Recent developments in financial markets and trends are summarized. Fundamental, technical, flow of funds and position analysis are fulfilled. Market expectations for the next week are discussed.

Members: CEO, CIO, Portfolio Managers, Chief Economist

Stock Selection Committee:

The Committee meets every Monday to review the portfolio. Company stories, sectoral trends, earning results and revisions are discussed. A review of the “most promising stocks”

is processed and new list of selected stocks is defined.

Members: CIO, Portfolio Managers, Research Analysts

Source: HSBC

Risk Management

18

Framework

Investment Team Operational Control Parent Oversight

Portfolio Manager Risk Guidelines and Portfolio Constraints Market Risks

Trading Desk

Counterparty risks

Market risks

Risk Control In-house risk limits

Regulatory guidelines

Management Assistance Operational risk control

Transaction Review Committee

Internal Control/Compliance Process control

HSBC’s Risk Management and Audit Control of processes (including Risk Control Processes)

Follow up of risk control activities

Limits with respect to the tracking error targets for the fund

The team is supported by a well proven Risk Management Framework which is put into place to comply with the identified risks characterising investments in the Turkish market.

Source: HSBC Global Asset Management, Information is for illustrative purposes only.

Risk Management Framework

Market Overview

20

A peculiar geography with geo-strategic advantage

World’s 17th

largest economy with Europe’s 3rd

largest population at 72 million

At the crossroads of the Balkans, the Middle East and the Caucasus, Turkey is becoming a major energy corridor connecting CIS and Middle Eastern Countries with Europe

Anchored to EU with the accession talks

As being a successful democratic country with a Muslim society, becoming a role model than ever with building greater economic and political ties with Middle Eastern countries

Sources: TURKSTAT, United Nations; December 2010

21

Favourable demographics

A solid reason for a fast economic growth:

Turkey’s 72 m population is growing by 1.3% per annum

The average age of population is 28

Only 15% of population is expected to be over 60 in 2025(F)

10

20

30

40

50

60

70

1927

1935

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

2000

0%

1%

1%

2%

2%

3%

3%

Population (mn) Annual Grow th Rate (rhs)Cze

chH

unga

ryP

olan

dR

ussi

aTa

iwan

Kor

eaC

hile

Arg

entin

aIs

rael

Thai

land

Chi

naTu

rkey

Bra

zil

Sou

th A

frica

Ven

ezue

laIn

done

sia

Per

uM

exic

oM

alay

sia

Indi

aE

gypt

Phi

lipin

nes

5

10

15

20

25

30

Percent of population above age of 60 in year 2025(F)

Growing population (average growth 1.3% p.a.)

Sources: TURKSTAT, United Nations ; December 2010 - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

22

Overview of the economy: A solid turnaround in the last decade

World’s 17th

largest economy with a GDP of USD 736billion

(2010)

1990s have been characterised by ‘boom and bust’

cycles, i.e. high growth coupled with high inflation followed by recessions, due to mainly lack of political stability to carry out a structural reform process

The most severe economic crisis of its recent history in 2001 has opened way for a decade of political stability and structural reforms.

Following 2001 crisis, the economy has bounced back rapidly growing on average 6% until 2008 when interrupted by the global crisis

Seven consecutive years of disinflation since 2001, CPI tumbled from 77% in 2001 to 5.5% in 2009. Latest level is around

4% both for CPI and core inflation.

After the shock of global crisis, the economy started to grow rapidly in 2010: GDP growth have been 8.9%

Current account deficit can be considered as the major risk ahead.

Sources: TURKSTAT, United Nations ; December 2010

23

Investment Case:

Turkey: During global crisis

Strong performance during the global crisis as opposed to previous examples of crises•

relatively strong Turkish Lira,•

low level of interest rates, •

falling inflation,•

no requirement of

IMF funding.

Consequently, Turkey passed the test of global financial and economic crisis successfully.

A decade of structural reforms provided Turkey a shield against

shocks and initiated a positive paradigm shift that has been

more visible with the help of global crisis.

We expect this paradigm shift to change dramatically the

spending and investment behaviour of households and corporations. This will be main pillar of

growth in the long-run.

Rating upgrades has started: Fitch, Moody’s, JCR, S&P all acted.

More to come...

Perceptions

of local and international investors on Turkey have started to turn into a “long-term growth story”

rather than a “cyclical play”.

24

Investment Case:

Turkey: A locomotive country for global growth

in recovery from global crisis

In 2009 domestic and foreign demand collapsed and economy contracted sharply

But recovered very fast: 8.9% GDP growth in 2010.

It is not a cyclical recovery but expected to continue at around

5% in next two years with strong long-term dynamics, because;

•

Favourable demographics: Young, large and fast growing population •

Relatively low level of debt supports growth: Both for public and household•

First time ever single digit interest rate environment

stimulates spending and investment•

Huge pent-up domestic demand and low inventory levels•

Solid banking sector: well capitalized, profitable

and prepared to finance economic growth•

Low level of financial penetration sets the stage for further growth

Sharply widening current account deficit seems to be the only risk factor

Sources: TURKSTAT, United Nations ; June 2011

25

Solid Banking Sector

Strictly regulated

and...

–

Tight banking sector regulations preventing banks from taking excessive risk

–

No derivative products–

No sub-prime bonds–

No off-balance sheet hidden risks–

No long-short FX risk

...Self funded banking system

Source: BRSA, TBB ; April 2011

Loan to deposit ratio of Turkish banking system

30%

40%

50%

60%

70%

80%

90%

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

Feb-

11

Banking system liability breakdown76%

3%6%

10%5%

62%

10%7%

14%

7%

64%

9%6%

14%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Deposits Borrowings(Banks)

Borrowings(Repo)

Shareholdersequity

Other

State Banks Private Banks Banking Sector

26

Banking sector aggregate CAR31%

29%

24%22%

18%19%

24%

17%18%

10%

15%

20%

25%

30%

35%

2002

2003

2004

2005

2006

2007

2008

Oct

-08

Nov

-08

Dec

-08

Jan-

09Fe

b-09

Mar

-09

Apr-0

9M

ay-0

9Ju

n-09

Jul-0

9Au

g-09

Sep-

09O

ct-0

9N

ov-0

9D

ec-0

9Ja

n-10

Feb-

10M

ar-1

0Ap

r-10

May

-10

Jun-

10Ju

l-10

Aug-

10Se

p-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11Fe

b-11

Solid Banking Sector (continued)

Enjoying solid Return on Equity (ROE) and high Capital Adequacy Ratio (CAR)

Entered the crisis with the CAR around 17% and increased to approximately 20% recently

Despite a significant jump in NPL’s

during the crisis, banking ROE’s remained high and recently NPL’s

started to come down

Source: BRSA ; April 2011

BRSA's requirement: 12%

Banking sector-NPL Ratio

2.0%2.5%3.0%3.5%4.0%4.5%5.0%5.5%

Dec-0

7Fe

b-08

Apr-0

8Ju

n-08

Aug-0

8Oc

t-08

Dec-0

8Fe

b-09

Apr-0

9Ju

n-09

Aug-0

9Oc

t-09

Dec-0

9Fe

b-10

Apr-1

0Ju

n-10

Aug-1

0Oc

t-10

Dec-1

0Fe

b-11

Banking Sector ROAE

0%

5%

10%

15%

20%

25%

2004

2005

2006

2007

2008

2009

2010

Mar-1

1

27

Financial penetration is increasing but still low

Banking sector grew at higher rates than GDP in last decade

Banking assets to GDP ratio is at 91% (2010) and still have large room for future growth

Source: HSBC, BRSA, Turkstat - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

Total Assets of Credit Institutions / GDP (%), 2008

79.4

0

50

100

150

200

250

300

350

400

450

500

United

Kingdo

mAus

triaFranc

eEU-27

German

ySpa

inPort

ugal

Sweden Ita

lyFinl

and

Greece

Bulgari

a

Czech

Rep

ublic

Slovakia

Turkey

Poland

Roman

ia

Banking Sector Real Growth Rate

-10%

-5%

0%

5%

10%

15%

20%

25%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Banking Real Growth GDP Growth Banking Average

28

Interest rates at historical lows

Between

2002-2008, nominal and real interest rates hovered around 20% and 10% levels respectively.

During the crisis, the strength of Turkish financial markets and

proactive policy action by the Central Bank of Turkey reduced the risk premium significantly and supported by

global

disinflation, interest rates reached to lowest

levels

in

financial history.

Sources: Ministry of Finance, CBT, Reuters ; April 2011 - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

* Based on 2 Year index of reference Government Bond and Expected CPI

Benchmark Bond vs CBT Policy Rate (%)

6

8

10

12

14

16

18

20

22

24

26

Sep-

06

Dec

-06

Mar

-07

Jun-

07

Sep-

07

Dec

-07

Mar

-08

Jun-

08

Sep-

08

Dec

-08

Mar

-09

Jun-

09

Sep-

09

Dec

-09

Mar

-10

Jun-

10

Sep-

10

Dec

-10

Mar

-11

Benchmark Bond Yield CBT Policy Rate (comp)

2 Year Ex-Ante Real Interest Rates *

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Sep-

06

Dec

-06

Mar

-07

Jun-

07

Sep-

07

Dec

-07

Mar

-08

Jun-

08

Sep-

08

Dec

-08

Mar

-09

Jun-

09

Sep-

09

Dec

-09

Mar

-10

Jun-

10

Sep-

10

Dec

-10

Mar

-11

29

01020304050607080

Spai

n

Portu

gal

EU27

Gre

ece

Italy

Hun

gary

Pola

nd

Cze

chR

ep.

Turk

ey

Household Debt excl. mortgages/GDP (%) Household Debt/GDP (%)

Low level

of household and corporate debt...

–

Low level of household debt at only 15% of GDP and embryonic mortgage market will provide fuel for future growth potential of Turkish economy.

Comparison of household debt (as of 2008)

Source: CBRT, HSBC - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

–

Corporate sector had

been shy of increasing leverage because of unstable economy and politics, lack of longer-term borrowing facilities and relatively high interest rates.

Corporate Debt (as % of balance sheet total)

30

35

40

45

50

55

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Leveraging will provide further boost to Turkish economy with the help of low interest rates, contrary to the ongoing deleveraging process in many other countries.

* Balance sheet of large enterprises, CBRT

30

...and also relatively

better picture

in

public debt

Decade long disciplined budget policy reduced Debt to GDP ratio sharply. Following

a

slight increase

in 2009, it came down to

42% in 2010

and expected to continue

to fall in coming years.

One

of the lowest in Europe.

Source: CBRT, HSBC, EU Banking Structures 2010 - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

Manageable budget deficit and lower public debt stock also eliminate the risk of crowding- out, allowing full speed growth of private sector.

Government Debt % of GDP (2010 Forecast)

42%

25%

50%

75%

100%

125%

150%

Greece Ita

ly

Belgium

Portug

al

France

Irelan

dUK

German

yMalt

a

Austria

Netherl

ands

Spain

Cyprus

Finlan

d

Turkey

Slovakia

Gross public debt stock (% of GDP)

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F

31

A strong come back from global crisis: robust economic

recovery...

Sources: TURKSTAT, Bloomberg, April 2011 - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

Within EMEA, despite strong base effect of 2010, Turkey is expected to have the highest GDP growth rates: 4.6% in 2011

and 4.8% in 2012. A high beta exposure in the region.

After a break of two years, economic growth is back on track. Economy grew by 8.9%

in 2010.

GDP Growth - Quarterly

-16%

-12%

-8%

-4%

0%

4%

8%

12%

1Q00

2Q00

3Q00

4Q00

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Real GDP YoY chg. (LHS) Seasonally Adj QoQ chg. (RHS)

EMEA Region GDP Growth Forecasts(Bloomberg Cont. Comp.)

-8

-6

-4

-2

0

2

4

6

8

10

CzechRep.

Hungary Poland Russia SouthAfrica

Turkey

2009 (%) 2010 (%) 2011F (%) 2012F (%)

32

...with an unpleasant side effect: sharply widening current account deficit

Growth periods of Turkey have always resulted in large current account deficits and deficit financed by capital flows.

Coming back to the growth path, current account deficit started to widen again.

Sources: CBRT ; HSBC ; April 2011 - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

Current Account Deficit % GDP and GDP Growth

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

(F)

CAD % of GDP GDP Growth

What is worrying this time?– Acceleration in the pace of deficit implies a

much higher deficit than seen in previous cycle

– Quality of capital flows, which mostly consist of portfolio inflows and banking sector foreign borrowing

Current Account Deficit (12m rolling)

-10

0

10

20

30

40

50

60

70

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

USD bn

33

Measures taken by the Central Bank of Turkey

What can be done to contain current account deficit and increase the quality of finance?

–

Economic growth is mostly driven by strong domestic demand. It needs to be slowdown until external demand catches up

–

Free float exchange rate regime should work as a balancing mechanism

Sources: CBRT ; HSBC ; May 2010 - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

In late 2010, CBT introduced a new policy mix

aiming to reduce loan growth and discourage short-term foreign fund flows

–

Low policy rates –

Wide over-night interest rate corridor–

Hike in bank’s reserve requirement ratios

TRY against the basket of EUR and USD

1.60

1.70

1.80

1.90

2.00

2.10

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep-

09

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep-

10

Nov

-10

Jan-

11

Mar

-11

May

-11

Total loan growth (y-o-y) and 12-m rolling C/A gap (USD bn)

0%5%

10%15%20%25%30%35%40%45%

Jan-

07

Apr-

07

Jul-0

7

Oct

-07

Jan-

08

Apr-

08

Jul-0

8

Oct

-08

Jan-

09

Apr-

09

Jul-0

9

Oct

-09

Jan-

10

Apr-

10

Jul-1

0

Oct

-10

Jan-

11

Apr-

11

-65

-55

-45

-35

-25

-15

Total loans Current account balance (12-m, right axis, inverted)

bn USDy-o-y

34

Measures taken by the Central Bank of Turkey

(Continued)

Policy rate(weekly

repo) cut by 75bps to 6.25% and ON borrowing rate by 425 bps to 1.5% aiming to;

– Increase the volatility in short-term rates – Discourage short-term carry trades– Replace hot money with longer-term portfolio

inflows

Sources: CBRT ; HSBC ; April 2011 - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

RRR on shorter-term deposits increased by 1100 bps to 16% aiming to

reduce loan growth by;

–Increasing banks’

cost base and loan rates

–Draining liquidity from banking system

Over-night and Policy Rates of CBT (%)

Reserve Requirement Ratio on Deposits (%)

35

JPN

ESP

FRA

GBR

DEU

USA

ROU

PRT

LTULVA

ITA

AUT

IRL

GRC

EST

BGR

SVKCZE

EGY

UKR

TUR

ZAF RUS

POLKAZ

HUN

y = 0.16x + 3.95R2 = 0.62

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

Average Rating (AAA=1, C=21)

Log(

5yr C

DS)

CDS Market Analysis: Rating has Upward Momentum!

Fitch, Moody’s and finally S&P increased sovereign rating of Turkey.

Turkey is one notch below investment grade by Fitch and two notches below by S&P and Moody’s with all positive outlook

In our opinion, this was a late action by rating agencies and credit spreads already reflect possibility of further upgrades. For long, Turkey CDS level has been close to peers (Russia, South Africa and Poland) who are investment grade.

We also believe that Turkey is likely to be the next candidate for investment grade, although CAD concerns delayed the expectations to 2012.

Source: Bloomberg; May 2011

Source: Bloomberg

Source: HSBC - April 2011 -Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

31/12/2009 27/05/2011 Change in Bps S&P RatingGREECE 281 1450 1169 BPORTUGAL 91 683 592 BBB-IRELAND 156 677 521 BBB+SPAIN 111 256 145 AAITALY 109 167 58 A+HUNGARY 242 264 22 BBB-POLAND 132 146 14 A-SOUTH KOREA 87 98 11 ABRAZIL 123 108 -15 BBB-TURKEY 183 166 -17 BBCZECH REPUBLIC 94 77 -17 ASOUTH AFRICA 142 123 -19 BBB+MEXICO 134 105 -29 BBBRUSSIA 186 143 -43 BBB

PIIGS + EM CDS Performance Since 2009

HSBC GIF Turkey Equity Fund -

Overview

37

Fund type and domicile

UCITS III Luxembourg SICAV part of the HSBC GIF range

Launch Date

Fund:

22/03/2005

Base Currency

Euro

Benchmark*

MSCI Turkey

Liquidity

Daily

Minimum Investment –

Institutional Share Class

USD 1,000,000 –

Retail Share Class

USD 5,000

Fee Structure–

Institutional Share Class 0.875 % Fixed Management Fee–

Retail Share Class

1. 75 % Fixed Management Fee

Investment Vehicle

*This is the current internal benchmark, which may change and is not detailed in the fund's prospectus. This benchmark is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability for any failure to meet this benchmark.

38

Sector Weightings versus Benchmark**Sector Weightings

HSBC GIF Turkey Equity Fund – Sector weightings*

Source: HSBC Global Asset Management as at 30th June 2011. * For illustrative purposes only. This benchmark is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability for any failure to meet this benchmark.

-5.2% -4.8%-4.3%

-3.3%

-1.1%

1.0% 1.1%

2.6% 2.7% 3.0% 3.2%

1%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

Tele

com

mun

icat

ions

Food

& B

ever

ages

Food

& D

rug

Ret

aile

rs

Oil

& G

as P

rodu

cers

Bank

s

Rea

l Est

ate

Hou

seho

ld G

oods

Trav

el &

Lei

sure

Oth

ers

Auto

mob

iles

& P

arts

Min

ing

Con

glom

erat

es

Banks47.8%

Others2.6%

Oil & Gas Producers2.3%

Automobiles & Parts2.7%

Household Goods2.9%

Food & Drug Retailers0.5%

Real Estate2.9%

Food & Beverages1.9%

Mining3.0%

Travel & Leisure3.1%

Industrial Metals5.7%

Telecommunications7.5%

Conglomerates16.5%

Cash0.7%

39

HSBC GIF Turkey Equity Fund – Overview individual stock exposures*

Top 10 Holdings

Source: HSBC Global Asset Management as at 30th June 2011. * For illustrative purposes only. This benchmark is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability for any failure to meet this benchmark.

Company Sector Portfolio Weight (%)

Is Bankasi Banks 9.74%

Garanti Bankasi Banks 9.59%

Halkbank Banks 7.61%

Akbank Banks 7.27%

Yapı ve Kredi Bankasi Banks 5.51%

Vakifbank Banks 4.90%

Turkcell Telecommunications 4.57%

Enka Insaat Conglomerates 4.34%

Sabanci Holding Conglomerates 3.84%

Kardemir Industrial Metals 3.29%

60.7%TOTAL

40

Performance Net –

AC Share Class

Source: Morningstar as at 30th June 2011. Gross income reinvested, Bid to Bid USD. For illustrative purposes only. This benchmark is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability for any failure to meet this benchmark. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way

Rolling time 30/06/2005 to 30/06/2006

30/06/2006 to 30/06/2007

30/06/2007 to 30/06/2008

30/06/2008 to 30/06/2009

30/06/2009 to 30/06/20010

30/06/2010 to 30/06/2011

HSBC GIF Turkey Equity Fund -1.92 40.33 -17.86 -1.55 70.46 -3.82

As at 30 June 2011 1 M 3 M 6 M 1 Y 3 Y 5 Y

HSBC GIF Turkey Equity Fund -1.71 -6.49 -15.37 -3.82 61.41 93.70

Benchmark -1.95 -7.46 -15.16 -6.36 82.49 90.52

Calendar years 2011 2010 2009 2008 2007 2006

HSBC GIF Turkey Equity Fund -15.37 37.65 101.50 -48.30 24.70 -4.80

Benchmark -15.16 27.80 92.30 -42.50 39.00 -6.70

Fund Benchmark Fund Benchmark

119.1% 128.0% -1.7% -2.0%

13.4% 14.1% -6.5% -7.5%

34.4% 30.6% -15.4% -15.2%

-34.1% -29.2% -15.4% -15.2%

60.0% 58.7% -3.8% -6.4%

3.9% 28.4% 24.8%* All returns longer than 1 year are annualised

Returns - 2 years*

Returns - 1 year

Returns - 1 Month

Returns - 3 Months

Returns - 6 Months

Returns - Year To Date

% Positive Months

Tracking Error

Monthly Statistics

Returns Since Inception

Best Month

Annualised Returns

Worst Month

Outlook

42

Market Overview

376

stocks are listed on ISE with

290

Bio USD market capitalisation and 25% free float

Market capitalisation is expected to grow with new public offerings in 2011

and 2012 (more than 20 new offerings expected)

One of the most liquid market in the region.

Sources: Reuters, ISE, June 2011 - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

ISE 100 Index has rallied since 2009

5,000

15,000

25,000

35,000

45,000

55,000

65,000

Dec-99

May-00

Oct-00

Mar-01

Aug-01

Jan-0

2Ju

n-02

Nov-02

Apr-03

Sep-03

Feb-04

Jul-0

4Dec

-04May

-05Oct-

05Mar-

06Aug

-06Ja

n-07

Jun-0

7Nov

-07Apr-

08Sep

-08Feb

-09Ju

l-09

Dec-09

May-10

Oct-10

Mar-11

Daily average trading volume (m$)

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Jan-1

0Feb

-10Mar-

10Apr-

10May

-10Ju

n-10

Jul-1

0Aug

-10Sep

-10Oct-

10Nov

-10Dec

-10Ja

n-11

Feb-11

Mar-11

Apr-11

May-11

Jun-1

1

43

ISE Investor Profile

Foreign investors:–

Better investment environment and high growth prospects for Turkish companies attracted more foreign investors in 2000’s

–

Consequently, the holdings of foreign investors in ISE grew from

low 40%s in 2003 to 62% of the free float in 2011.

–

Although favoured by fund managers over the last years, Turkey’s share in foreign funds

remains relatively low. Rating upgrades and increase in market capitalization may eventually lead more positioning of foreign investors in Turkish stocks.

Sources: ISE, EPFR ; June 2011

GEM & Eastern European funds weights in EMEA(%)

0%

2%

4%

6%

8%

10%

12%

Cze

ch

Egyp

t

Hun

gary

Jord

on

Mor

occo

Pola

nd

Rus

sia

SA

Turk

ey

Oth

er E

MEA

0%

10%

20%

30%

40%

50%

60%

GEM fund managers' position(left) EE fund managers' position(right)

Foreign Equity Holdings % of Free Float

Jun-1162%

58

60

62

64

66

68

70

72

74

Jan-

05Ap

r-05

Jul-0

5O

ct-0

5Ja

n-06

Apr-

06Ju

l-06

Oct

-06

Jan-

07Ap

r-07

Jul-0

7O

ct-0

7Ja

n-08

Apr-

08Ju

l-08

Oct

-08

Jan-

09Ap

r-09

Jul-0

9O

ct-0

9Ja

n-10

Apr-

10Ju

l-10

Oct

-10

Jan-

11Ap

r-11

44

ISE Investor Profile

Local investors:–

Real rates started to fall consistently after 2002. The decline has been more distinct in 2009

and

2010–

First signals of increase in the equity investments of mutual funds is seen–

However there’s a lot more way to go under the new low-yield environment–

Overall still fixed income constitutes the bulk and a tiny portion of savings are invested in stocks–

Locals are under-invested in ISE

Sources: TURKSTAT, ISE, CBRT - June 2011

Mutual Funds' Equity Share (%)

Jun-11 5.1 %

0

5

10

15

20

Jan-

98

Jul-9

8

Jan-

99

Jul-9

9

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

45

Turkish Equity -

Relative Performance

With the effects of global down turn and uneasiness in local politics in 2008, Turkey equities underperformed their peers in EM and bounced back in 2009

and

2010.

Despite the

rebound in 2009 and 2010, Turkish equities remains relatively inexpensive compare to the EM countries

Source: HSBC Research, 25/07/2011 - Ratios are based on HSBC Global Research Coverage - Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets.

*The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an 'as is' basis and the user of this information assumes the entire risk of any use it may make or permit to be made of this information. Neither MSCI, any of its affiliates or any other person involved in or related to compiling, computing or creating the MSCI information (collectively, the 'MSCI Parties') makes any express or implied warranties or representations with respect to such information or the results to be obtained by the use thereof, and the MSCI Parties hereby expressly disclaim all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential or any other damages (including, without limitation, lost profits) even if notified of, or if it might otherwise have anticipated, the possibility of such damages.

P/E EV/EBITDA P/E EV/EBITDA

TURKEY 10.3 7.1 9.0 6.2

CEEMEA 8.8 6.4 8.4 6.0

EM 10.5 8.7 9.4 7.9

2011 (F) 2012 (F)

2006 2007 2008 2009 2010 June - 2011

MSCI Turkey -2.5% 44.8% -50.1% 92.8% 24.5% -3.8%

MSCI EM EMEA 25.8% 21.9% -48.6% 50.3% 19.2% -0.1%

MSCI EM Asia 27.7% 39.1% -47.1% 68.1% 15.0% -0.4%

MSCI EM Lat. Am. 37.6% 35.6% -37.7% 63.2% 9.2% -6.7%

MSCI Index Returns as of June 2011

Appendix

47

Fund manager biography

Ercan Güner – Lead Fund Manager Ercan

Güner

is the Head of Equity and Structured Funds for HSBC Global Asset Management Turkey. Prior to joining HSBC in 2008, he served as the CFO for Akdede

Group. He began his career in finance at Yapi

Kredi

Investment Banking arm as equity trader in 1992 and later moved to Yapi

Kredi

Asset Management, as fund manager.

48

This presentation is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The contents of this presentation are confidential and may not be reproduced or further distributed to any person or entity, whether in whole or in part, for any purpose. The material contained herein is for information only and does not constitute investment advice or a recommendation to any reader of this material to buy or sell investments. HSBC Global Asset Management (UK) Limited has based this presentation on information obtained from sources it believes to be reliable but which it has not independently verified. HSBC Global Asset Management (UK) Limited and HSBC Group accept no responsibility as to its accuracy or completeness. This presentation is intended for discussion only and shall not be capable of creating any contractual or other legal obligations on the part of HSBC Global Asset Management (UK) Limited or any other HSBC Group company. Care has been taken to

ensure the accuracy of this presentation but HSBC Global Asset Management (UK) Limited accepts no responsibility for any errors or omissions contained therein. This presentation and any issues or disputes arising out of or in connection with it (whether such disputes are contractual or non-contractual in nature, such as claims in tort, for breach of statute or regulation or otherwise) shall be governed by and construed in accordance with English law.The views expressed above were held at the time of preparation and are subject to change without notice.Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability for any failure to meet such forecast, projection or target.The value of investments and any income from them can go down as

well as up and investors may not get back the amount originally

invested. Where overseas investments are held the rate of currency exchange may cause the value of such investments to go down as well as up.HSBC GIF Turkey Equity Fund is a sub-fund of the HSBC Global Investment Funds, a Luxembourg domiciled

SICAV. UK based investors in HSBC Global Investment Funds are advised that they may not be afforded some of the protections conveyed by the provisions of the Financial Services and Markets Act 2000. HSBC Global Investment Funds is recognised in the United Kingdom by the Financial Services Authority under section 264 of the Act. The shares in HSBC Global Investment Funds have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to United States Persons. All applications are made on the basis of the current HSBC Global Investment Funds Prospectus, simplified prospectus and most recent annual and semi-annual reports, which can be obtained upon request free of charge from HSBC Global Asset Management (UK) Limited, 8 Canada Square, Canary Wharf, London, E14 5HQ. UK, or the local distributors. Investors and potential investors should read and note the risk warnings in the prospectus and relevant simplified prospectus. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in established

markets. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the

countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries in which they trade.Brokerage commissions, custodial services and other costs relating to investment in Emerging Markets generally are more expensive than those relating to investment in more developed markets. Lack of adequate custodial systems in some markets may prevent investment in a given country or may require a

sub-fund to accept greater custodial risks in order to invest, although the Custodian will endeavour to minimise such risks through the appointment of correspondents that are

international, reputable and creditworthy financial institutions. In addition, such markets have different settlement and clearance procedures. In certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. The inability of a sub-fund to make intended securities purchases due to settlement problems could cause the sub-fund to miss attractive investment opportunities. Inability to dispose of a portfolio security caused by settlement problems could result either in losses to a sub-fund due to subsequent declines in value of the portfolio security or, if a sub-fund has entered into a contract to sell the security, could result in potential liability to the purchaser.

Important information

49

MSCI Index – The MSCI information may only be used for your internal use, may

not be reproduced or redisseminated

in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an ‘as is’

basis and the user of this information assumes the entire risk of any use it may make or permit to be made of this information. Neither MSCI, any of its affiliates or any other person involved in or related to compiling, computing or creating the MSCI information (collectively, the ‘MSCI Parties’) makes any express or implied warranties or representations with respect to such information or the results to be obtained by the use thereof, and the MSCI Parties hereby expressly disclaim all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential or any other damages (including, without limitation, lost profits) even if notified of, or if it might otherwise have anticipated, the possibility of such damagesThe risk also exists that an emergency situation may arise in one or more developing markets as a result of which trading of securities may cease or may be substantially curtailed and prices for a sub-fund’s securities in such markets may not be readily available.Investors should note that changes in the political climate in Emerging Markets may result in significant shifts in the attitude

to the taxation of foreign investors. Such changes may result in changes to legislation, the interpretation

of legislation, or the granting of foreign investors the benefit of tax exemptions or international tax treaties. The effect of such changes can be retrospective and can (if they occur) have an adverse impact on the investment return of shareholders in any sub-fund so affected.This sub-fund invests predominantly in one geographic area; therefore any

decline in the economy of this area may affect the prices and value of the underlying assets. Stockmarket

investments should be viewed as a medium to long term investment and should be held for at least five years. Any performance information shown refers to the past and should not be seen as an indication of future returns.To help improve our service and in the interests of security we may record and/or monitor your communication with us.HSBC Global Asset Management (UK) Limited provides information to Institutions, Professional Advisers and their clients on the investment products and services of the HSBC Group. This presentation is approved for issue in the UK by HSBC Global

Asset Management (UK) Limited, who are authorised and regulated

by the Financial Services Authority. www.assetmanagement.hsbc.com/ukCopyright ©

HSBC Global Asset Management (UK) Limited 2011. All rights reserved. 20869/082011/FP11-1566

Important information (cont’d)