GLOBALMACRO：FRIDAY14THDECEMBER1216

1、section heading index00 s 2) favourable markets and declining interest rates should help deleveraging, driving returns for ipps; 3) high spot power tariffs and low coal prices provided support in 2012 spot tariffs could tick up further in 2013. we shift our preference to ntpc vs. powergrid/nhpc amon

2、g the regulated models, and continue to prefer jpvl and jsw energy among the private ipps. detailed report on page 15 recommending ncsoft over nhn. in this report, we focus on the rising earnings risks to nhns fundamental outlook heading into 2013, which could put pressure on valuations. not only do

3、 we lower the 4q12 earnings outlook on slower growth, but we also estimate that the current share price is still embedding a w3tr value for line, which could deflate on lagging monetization. in addition, we see downside risk to web board revenues in 2013. on the flipside, our recent company visit to

4、 ncsoft indicates 4q12 earnings could be slightly above our expectation while the stock has already been penalized with a low valuation. from both a nearterm and longer-term structural perspective, we favor ncsoft over nhn. detailed report on page 16 contd on next page page2deutsche bank securities

5、inc. 14 december 2012 db today - global/macro key company research europe european capital goods - martin wilkie smiths group - martin wilkie retail food: value drivers in uk convenience - sally ronald european non-food retail - charlie muir-sands/ warwick okines european pharmaceuticals - richard p

6、arkes prefer undervalued recovery plays. 12 months ago we wrote that first half weakness looked likely but that our survey showed investors getting more positive. roll forward one year and the same is true again. what scuppered 2012 was weaker global growth and a continued shift to the right for rec

7、overy expectations, especially for china. after the recent rally however, we think share prices already price-in a second half recovery next year. our preferred picks are where growth potential is not yet reflected in valuation, including for alstom, rexel (buy, e15.08), sandvik, outotec and weir. w

8、e also upgrade smiths group to buy in a note also published today. detailed report on page 17 margin upside and portfolio change may finally be on the agenda. two factors have previously kept us away from recommending smiths shares - margin uncertainty, and (the now receded) excessive market expecta

9、tions for disposals. we think that 2013 could allow smiths to outline new financial targets, now that cost programs are underway in the underperforming divisions, and that us governmental spending uncertainty should be resolved in q1. detailed report on page 18 convenience stores moving up the agend

10、a. buy-rated tesco looks best placed to benefit from its leading c-store portfolio in a fragmented, high-return market, which we expect to grow at c.5% vs. c.2% for the wider grocery market. due to changes in team structure, we transfer coverage of sainsbury and wm morrison from james collins (who w

11、ill assume secondary coverage) to sally ronald with immediate effect. james collins will continue to be the lead analyst for tesco. detailed report on page 19 uk retail sales have been solid but subdued in october and november, and the comparison base becomes tougher in december. there have been som

12、e signs of aggressive discounting, despite normal seasonal weather patterns and tight inventory levels. nevertheless we expect positive lfl sales for the majority of our coverage universe and in particular we are confident that carphone warehouse and signet can meet or beat forecasts. detailed repor

13、t on page 20 r measuring from the start of february this year undermines its gain completely. likewise, momentum strategies bled again, and valuation models performed poorly, making a relentless downtrend in vol the only real standout theme. the best empirical explanations of fx performance this yea

14、r have been shifts in growth (proxied by pmis) and monetary policy (2-year rates) for g10, as well as current account balances in em (charts 1-3). when plotted against spot changes, these generate best-fit regressions of 45%, 63% and 30%, respectively - though the latter can be lifted on a regional

15、basis to 85% in asia (ex sgd and myr both of which saw big percentage point falls in their external surpluses, but from a very high base), 60% in emea (ex huf) and 51% in latam (ex brl see charts 4-6). should such relationships hold in 2013, and if our economists projections prove correct, cad and n

16、zd will benefit above aud and eur on the rates front, and gbp and sek over aud and nok in terms of growth. in em, zar would gain from a significantly smaller deficit, while twd and krw should find tailwinds turn to headwinds as this years swelling of external surplus reverses by at least a similar d

17、egree. in trend terms, what stands out technically is how range-bound most fx markets have been. out of more than 30 widely traded pairs, only eur/gbp, eur/nok and eur/sek in g10, plus usd/cny, usd/php, usd/zar and usd/brl in em look likely to end 2013 beyond last years lows or highs. at a stretch t

18、o 85.55, usd/jpy might just join them yet. consensus forecasts imply the standout trades for 2013 will be long inr, brl and zar, funded in eur, chf and jpy, while coss trades like long pln/huf (or czk) and short nok/sek should also do well. in a risk-seeking world wed treat these as good signals to

19、follow (rather than fade), positions being light and valuations quite attractive. in fact, on paper db is considerably more bearish on jpy (90) and eur (1.20) than the street - though the latter is an h2 view. we are less excited by brl (2.05 is our end-13 target) but more optimistic on zar (8.10).

20、our latest published forecasts are also much more constructive on php (38.0), moderately bullish on ils (3.71), and we stand out as being negative on clp (512). as to idiosyncratic stories, sgd was the obvious one last year, trading at the bottom of its +/-3% policy band. it is now hugging the top o

21、f a narrower (+/-2%) range, so represents a decent medium-term short in spite of the 2% per annum upward slope. eur/chf longs are certainly worth persevering with, as the snbs floor has gained credibility and the incentive for large-scale eurozone capital flight has been reduced. to these one could

22、add the yen, political pressure to weight on a weakening trend already fuelled by the sharpest balance of payments deterioration on record. this year will also mark the first in five that analysts forecast for usd/jpy have been overshot, by about 5%. forecast errors are frequently serially correlate

23、d, and in the previous four years here they averaged a whopping -15%. james malcolm (+44) 020 754-50884 page10deutsche bank securities inc. 14 december 2012 db today - global/macro global commodities dailyeyes on chinas economic work conference overview the gold market remains in the doldrums, tradi

24、ng near the bottom of its range (usd1,690/oz to usd1,750/oz). this is despite the announcement of a further round of quantitative easing by the us fed, with usd45bn/month of treasury purchases. there may be several reasons for this price behaviour in our view, 1 the move by the fed was widely expect

25、ed and therefore was likely priced into the market, 2 concerns regarding the possible resolution of the us fiscal cliff seem to be growing, which suggests that the market may start to price in the low-growth consequences of the imposition of higher taxes in the us. this would result in a further dec

26、line in money velocity within the country and therefore an offset to the growth in money supply implicit in the feds qe announcement. given the potential for the fiscal cliff to remain unresolved until january, we expect that the gold market could remain under some pressure. furthermore, we note tha

27、t the feds explicit targeting of unemployment (6.5%) may be interpreted to be hawkish given the current us unemployment rate of 7.7%. industrial metals also gave up some of their gains from earlier this week after the feds announcement. we believe the next event risk for the complex is the annual na

28、tional economic work conference in china this weekend. the market will follow the event closely to gauge the likely direction of policies under the new leadership. the conference should set the targets for gdp growth and inflation, and outline the monetary and fiscal policy stance (not in quantitati

29、ve terms) for 2013. our china economics team expects the gdp growth target to be set at 7.5% and cpi target at 3-4%. the government is likely to continue proactive fiscal policy and prudent monetary policy in 2013. db expects that the cyclicallyadjusted fiscal stance may be quite expansionary next y

30、ear and expect a modest increase in bench market interest rate towards the end of 2013. in our view, strong railway investment growth in h2 and a recent recovery in real estimate investment growth have supported iron ore and steel demand, which have tended to respond to a pick-up in construction act

31、ivity more quickly than industrial metals. we believe that more expansionary fiscal policy in china next year could sustain the recovery in fai growth and support a steady return of industrial metals demand to normalcy. xiao fu (44) 20 7547 1558 japan economics weeklyupward revision thanks to policy

32、 stimulus we have revised japans economic outlook upward. the revision is based on the following: an end to the negative payback following the end of auto subsidies, a continued recovery in housing investment, the implementation of a fy2012 supplementary budget, a stimulatory policy stance in the in

33、itial fy2013 budget, and slightly aggressive monetary easing. consequently, the economys trough is likely to arrive by march 2013. we maintain our existing outlook for real gdp to record five consecutive quarters of positive qoq growth from 1q (jan-mar) 2013. we forecast real gdp growth of 0.9% for

34、fy2012 (previous: 0.7%), 1.5% for fy2013 (1.0%) and a contraction of -0.5% for fy2014 (-0.5%). economic policies of a new administration expected to be led by the ldp, following the 16 december lower house election, seem likely to be characterized by aggressive fiscal stimulatory measures, aggressiv

35、e monetary easing, a slightly more constructive approach to re-commencement of nuclear power plants, and delays in microeconomic deregulation and growth strategies. in comparison with the previous outlook (16 november), our new economic outlook assumes a 2.5trn fy2012 supplementary budget and a 2trn

36、 addition to the initial budget for fy2013. these amounts are the value added (i.e. “true water” or mamizu) which constitute gdp. we, however, would have two reservations: 1) fiscal policy results in a temporary stimulus, and 2) we may assume too much true water in the fiscal packages. on monetary p

37、olicy, we assume another 5trn increase in the asset purchase program at the january 2013 monetary policy meeting, announcement of a new grand design of monetary policy at the may meeting, then followed by expansion of the monetary base at an annualized 30trn (vs annualized 15trn over the past two ye

38、ars). we think that quantitative monetary easing supports economic activity and the financial markets through several transmission channels. however, part of the stimulus could be compromised when other countries engage in aggressive qe. in order to match the size of monetary easing to the us federa

39、l reserves qe4 announced on 12 december, we calculate that the monetary base in japan has to grow at an annualized 50trn, which seems unlikely to materialize. we think achieving 2% cpi inflation seems very difficult. mikihiro matsuoka (+81) 3 5156-6768 deutsche bank securities inc.page11 14 december

40、 2012 db today - global/macro japan fi morning memoboj likely to leave room for additional easing in january todays market forecast: wait-and-see stance ahead of lower house election futures fell on the 13th. they opened lower due to the previous days decline in treasuries, yen depreciation, and ris

41、e in stocks. however, futures rallied at one point due to dip-buying on the downside. futures moved steadily lower following profit taking in the superlong and long-term zones, despite a smooth outcome to the 5-year jgb auction. in overseas markets yesterday, us november retail sales and new jobless

42、 claims were favorable, but house speaker john boehner emphasized that he and us president barack obama remain deeply divided over the fiscal cliff issue. we note the possibility of headline risk as obama and boehner are scheduled to meet in the evening. shares and bonds declined. we expect the jgb

43、market to remain range-bound today ahead of the lower house election. concerns about the us fiscal cliff continue to support domestic and overseas bonds. jgb market supply/demand is favorable due to the bojs large purchases of short- and medium-term jgbs, the large number of investors who have not a

44、dequately built up holdings, and reinvestment demand for a large volume of redemptions. however, the fomc decision to continue expanding the feds balance sheet is likely positive for risk assets. we expect us long-term rates to rise if agreement on the fiscal cliff is reached. we continue to recomme

45、nd buying on dips because we expect a large supplementary budget of over 10trn. one-month outlook: us economic data likely bottom-firm. expect yields to rise slightly as risk-off positions unwind if us politicians move swiftly to delay the fiscal cliff. investment policy: buy on dips at a 5-year yie

46、ld above 0.20% and 10- year above 0.9%. a slowdown in the us is a risk. makoto yamashita (+81) 3 5156-6622 page12deutsche bank securities inc. 14 december 2012 db today - global/macro us daily economic notes ip data should clarify the impact of sandy on q4 output commentary for friday: we have now s

47、een most of the data spanning the hurricane sandy disruption. thus far, it appears that the severity of the storms impact on the data has been mixed. case in point, november nonfarm payrolls were up +146k and the bls noted: “our analysis suggests that hurricane sandy did not substantively impact the

48、 national employment and unemployment estimates for november.” the household survey showed a much larger impact on the labor market as the “employed but not at work due to bad weather” series (369k) registered the highest reading for any november on record. meanwhile, jobless claims (343k) have alre

49、ady returned to their pre-hurricane levels and are actually only slightly above the cyclical low reached at the beginning of october (342k). in terms of spending, the consumer has held up reasonably well evidenced by strong november motor vehicles sales (15.5m vs. 14.2m previously) and decent retail

50、 sales both within the headline (+0.3%) and ex-autos (unch). in yesterdays report, retail control, the subcomponent of retail sales that is a direct input into gdp, rose 0.5% in november, following a flat reading in october. that places the level of november retail control up at a 4.1% annualized ra

51、te compared to q3, which was up 3.8% relative to q2. current quarter consumption is tracking near +1.0%, which is less than our +1.5% estimate. whether consumption can improve further will depend mainly on services, which account for more than half of spending. november industrial production, report

52、ed this morning, may be more resilient relative to our preliminary estimate. in prior hurricanes, the impact on industrial production was substantial; case in point, ip fell -2% month-on-month following hurricane katrina. however, our ip model now shows an increase for the month (+0.2%). in the even

53、t of an unusual ip result, it will be important to first look at utility output. in the case of katrina, for example, the pullback in output was concentrated on one specific industrynamely offshore oil production. this is evident in the chart below which shows that ip mining and mineral extraction d

54、ropped sharply (-10.3%) following katrina. this time, the main culprit in the northeast should be utility output, but somewhat surprisingly the november data was down only slightly compared to october. in short, hurricane sandys impact on current quarter growth may not be as bad as initially anticip

55、ated, particularly if industrial production logs a positive gain in november. joseph lavorgna (+1) 212 250-7329 deutsche bank securities inc.page13 1.1 14 december 2012 db today - global/macro hsbc holdings plcbuy reuters: 0005.hkexchange: hsiticker: 0005 hold to buy, tgt hkd80 to hkd90. being more

56、boring - in a good way; upgrading on better growth outlook price (hkd) price target (hkd) 52-week range (hkd) market cap (usdm) npl/total loans (%) book value/share (usd) price/book (x) 80.25 90.00 80.25 - 55.09 188,716 4.5 9.09 hinging on a us recovery, helped by better outlook in asia we expect hs

57、bcs underlying earnings to be driven by the recovery in the us and an improving outlook in asia. putting aside the risk of the us fiscal cliff, data out of the us points to an improving us housing market a source of pain for hsbcs run-off mortgage portfolio of us$44bn which has taken cumulative loss

58、es of 30% so far. though the speed of housing recovery is modest, we expect hsbc to show better progress in this non-core book through customer deleveraging and asset fye 12/31 provisioning (usdm) pre-prov profit (usdm) eps (usd) 2011a 2012e 2013e 12,127.0 8,580.0 7,808.4 32,085 27,102 33,176 0.92 0

59、.79 1.08 sales. as a result, we follow our uk banks analyst jason napier in upgrading hsbc from hold to buy with a raised target price of hk$90 (from hk$80). preparing for further cost cutting in may strategy day in may 2011 hsbc unveiled plans to make cost saves of us$2.5-3.5bn by end of per (x) yield (net) (%) 7.9 4.6 13.2 4.3 9.6 4.6 2013 with a cost/income ratio of 48-52%. management now expect to exceed the us$3.5bn target in 2013 though costs are up since 2011, and the cost/income ratio is well outside the target range. part of this is down to revenues having disappointed relative t