1、Disclosures & Disclaimer: This report must be read with the disclosures and the analyst certifi cations inthe Disclosure appendix, and with the Disclaimer, which forms part of it.Asset / SubcategoryJune 2021Multi-Asset | Emerging MarketsThe EM global infrastructure cornucopiaPlay video withJohn Loma

2、xMulti-AssetEmerging MarketsJune 2021By: John Lomax, Herald van der Linde and HSBC Global Research teamThe EM global infrastructure cornucopiaGEMs Equity StrategyThe global infrastructure story traditional and greenwill drive EM equities both directly and indirectly through higher metal pricesIn thi

3、s report we identify a broad range of stocks that could be benefi ciaries of this theme 1 Multi-Asset Emerging Markets June 2021 THIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINA Executive summary 2 Introduction 4 Part one: Trends in Global infrastructure spending 10 EM outlook and commodity pro

4、ducing countries 11 An ESG perspective on green infrastructure 13 Mainland China: infrastructure will continue to support growth 15 US infrastructure prospects and the American Jobs Plan 18 Next Generation EU 20 Metals & mining a selective green infrastructure play 23 Future cities: the changing sha

5、pe of urbanisation 25 Commodities and the Wests infrastructure plans 28 Part two: How to play the story in EM 31 Asian infrastructure plays 32 China metals and mining and domestic infrastructure spend 33 China industrials 35 China energy a traditional infrastructure exposure 38 ESG plays on Chinese

6、infrastructure spend 41 Asia ex mainland China playing the global infrastructure story 42 Non-Asia metals and mining plays 44 LatAm metals & mining and the global infrastructure thesis 45 EEMEA metals and mining and the global infrastructure thesis 47 Domestic-facing plays in commodity markets 49 Sa

7、udi Arabia the new investment program 50 Domestic-facing plays in Brazil and South Africa 56 Valuation and risks 66 Disclosure appendix 81 Disclaimer 87 Contents Multi-Asset Emerging Markets June 2021 2 This report focusses on global infrastructure spending and its EM beneficiaries. Infrastructure s

8、pending is likely to be a major growth catalyst globally, some of which will be in EM (especially China), but it is becoming increasingly more important in the developed world with the impact spreading to EM through higher commodity prices. The motivations for investing in infrastructure relate part

9、ly to addressing longstanding fault lines exacerbated by COVID-19, like unemployment and income inequality. However, increasingly, the aim is to pursue a Green agenda. Accordingly, the prospect is for a blend of both traditional and green infrastructure and we look at both; green infrastructure is,

10、in our view, likely to be particularly important. This report represents a collaborative project between many different HSBC economists and analysts. In Part one we outline and evaluate prospective trends in infrastructure spending. We look at this both geographically (China, US, EU) and by category

11、 (ESG, urban development). Since an important part of the transmissions mechanism to EM comes through higher commodity prices, this is also discussed. It is worth considering the transition between a prospective fall in Chinese spending and a potential increase in spending in the US and EU. One conc

12、ern is that there may be a rather abrupt decline in Chinese spending and that US/ EU spending may be too small and too slow in coming to compensate. We argue that such concerns are probably misplaced and that the prospective global infrastructure underpin is likely to be robust. In Part two we ident

13、ify a range of different EM beneficiaries. These are organised into three groups (i) Asian plays on Chinese infrastructure spending (ii) non-Asian metal and mining plays and (iii) domestic-facing plays in commodity markets. The table on the following page lists the EM winners our analysts have ident

14、ified associated with the global infrastructure story. While the list is quite extensive, we do not pretend that it is complete. Executive summary The global infrastructure story traditional and green will drive EM equities both directly and indirectly through higher metal prices In this report we i

15、dentify a broad range of stocks that could be beneficiaries of this theme 3 Multi-Asset Emerging Markets June 2021 Our best ideas for themes highlighted in the report Name Ticker Market Sector Rating Mkt Cap (USDm) Price currency Currt price Target price Upside P/E 2021e DY (%) 2021e RoE (%) 2021e A

16、nalyst Theme Theme 1: Asian plays on Chinese infrastructure spending MMG Limited 1208 HK China Metals & Mining Buy 4,473 HKD 4.30 7.50 74.4% 9.0 0.0% 39.4% Howard Lau*, CFA Asian infrastructure Angang Steel 347 HK China Metals & Mining Buy 6,280 HKD 4.91 8.00 62.9% 6.2 6.4% 10.9% Howard Lau*, CFA As

17、ian infrastructure Zoomlion Heavy Industry 1157 HK China Machinery Buy 1,851 HKD 9.08 15.20 67.4% 6.5 5.1% 19.7% Helen Fang* Asian infrastructure Zoomlion Heavy Industry A 000157 CH China Machinery Hold 12,105 CNY 10.92 12.90 18.1% 9.5 3.5% 19.7% Helen Fang* Asian infrastructure Weichai Power 2338 H

18、K China Machinery Buy 4,503 HKD 17.98 22.70 26.3% 10.9 3.2% 19.6% Helen Fang* Asian infrastructure Weichai Power A 000338 CH China Machinery Buy 19,136 CNY 18.00 19.20 6.7% 13.3 2.6% 19.6% Helen Fang* Asian infrastructure Airtac 1590 TT Taiwan Machinery Buy 6,803 TWD 992.00 1,470.00 48.2% 30.0 0.6%

19、26.1% Helen Fang* Asian infrastructure CNOOC 883 HK China Oil & Gas Buy 50,119 HKD 8.71 11.90 36.6% 4.7 9.6% 15.1% Thomas C. Hilboldt*, CFA Asian infrastructure China Gas Holdings Ltd 384 HK China Gas Utilities Buy 20,694 HKD 28.65 35.00 22.2% 13.5 2.1% 25.3% Evan Li* Asian infrastructure Xinyi Sola

20、r 968 HK Hong Kong Electric Utilities Buy 16,079 HKD 14.16 15.00 5.9% 23.9 1.9% 18.8% Evan Li* Asian infrastructure Nari Technology Co Ltd 600406 CH China Electrical Equipment Buy 21,945 CNY 30.30 38.00 25.4% 24.8 1.2% 15.6% Corey Chan* Asian infrastructure LG Chemical Ltd 051910 KS Korea Chemicals

21、Buy 52,340 KRW 825,000.00 1,060,000.00 28.5% 17.1 1.7% 19.2% Thomas C. Hilboldt*, CFA Asian infrastructure Formosa Plastics 1301 TT Taiwan Chemicals Buy 23,788 TWD 103.00 126.00 22.3% 16.0 4.7% 11.9% Evelyn Yu* Asian infrastructure PTT Plc PTT TB Thailand Oil & Gas Buy 45,209 THB 41.50 52.25 25.9% 9

22、.9 7.1% 12.7% Thomas C. Hilboldt*, CFA Asian infrastructure Theme 2: Non-Asian metal and mining plays Grupo Mexico GMEXICOB MM Mexico Metals & Mining Buy 37,950 MXN 96.86 120.00 23.9% 8.4 3.3% 30.8% Jonathan Brandt, CFA Non-Asian materials Vale VALE US Brazil Metals & Mining Buy 113,904 USD 22.20 25

23、.00 12.6% 4.7 6.9% 55.8% Jonathan Brandt, CFA Non-Asian materials Gerdau GGBR4 BZ Brazil Metals & Mining Buy 10,684 BRL 34.12 42.25 23.8% 6.0 5.0% 28.5% Jonathan Brandt, CFA Non-Asian materials Impala Platinum IMP SJ South Africa Metals & Mining Buy 14,063 ZAR 247.15 379.00 53.3% 6.7 8.0% 43.3% Lero

24、y Mnguni* Non-Asian materials Northam Platinum NHM SJ South Africa Metals & Mining Buy 8,463 ZAR 228.38 311.00 36.2% 7.0 0.0% 81.5% Leroy Mnguni* Non-Asian materials Theme 3: Domestic-facing plays in commodity markets Banque Saudi Fransi BSFR AB Saudi Arabia Commercial Banks Hold 11,768 SAR 36.80 34

25、.70 (5.7%) 16.0 3.1% 8.0% Aybek Islamov*, CFA Domestic facing Saudi National Bank SNB AB Saudi Arabia Commercial Banks Hold 63,524 SAR 53.20 47.20 (11.3%) 16.2 3.1% 11.1% Aybek Islamov*, CFA Domestic facing Almarai ALMARAI AB Saudi Arabia Food Products Hold 14,580 SAR 55.30 58.00 4.9% 27.3 1.8% 12.5

26、% Raj Sinha* Domestic facing Extra EXTRA AB Saudi Arabia Specialty Retail Buy 1,974 SAR 123.40 134.00 8.6% 20.3 3.0% 36.8% Ankur Agarwal*, CFA Domestic facing Banco Do Brasil BBAS3 BZ Brazil Commercial Banks Buy 18,811 BRL 33.98 52.00 53.0% 5.4 5.6% 14.5% Carlos Gomez-Lopez, CFA Domestic facing Itau

27、 Unibanco ITUB4 BZ Brazil Commercial Banks Buy 54,904 BRL 30.60 36.00 17.6% 12.1 3.7% 17.3% Carlos Gomez-Lopez, CFA Domestic facing CCR CCRO3 BZ Brazil Transport Infrastructure Buy 5,463 BRL 13.94 21.50 54.2% 15.2 4.6% 21.6% Santhosh Seshadri*, CFA Domestic facing Mercadolibre Inc MELI US Argentina

28、Internet & Catalog Retail Buy 68,241 USD 1,368.87 1,950.00 42.5% 830.2 0.0% 8.3% Ravi Jain Domestic facing Magazine Luiza S.A. MGLU3 BZ Brazil Specialty Retail Buy 25,456 BRL 20.35 26.00 27.8% 491.2 0.1% 3.6% Ravi Jain Domestic facing Lojas Americanas LAME4 BZ Brazil Multiline Retail Buy 7,657 BRL 2

29、1.40 29.00 35.5% 462.2 0.0% 0.8% Ravi Jain Domestic facing Sabesp SBSP3 BZ Brazil Water Utilities Buy 5,145 BRL 38.80 62.00 59.8% 8.1 2.8% 13.8% Lilyanna Yang, CFA Domestic facing Sabesp SBS US Brazil Water Utilities Buy 5,145 USD 7.57 11.50 51.9% 0.0 0.0% 13.8% Lilyanna Yang, CFA Domestic facing Fi

30、rstrand FSR SJ South Africa Commercial Banks Buy 23,138 ZAR 56.76 68.00 19.8% 15.0 3.7% 14.7% Henry Hall* Domestic facing Standard Bank SBK SJ South Africa Commercial Banks Buy 15,676 ZAR 135.38 159.00 17.4% 10.4 4.9% 11.4% Henry Hall* Domestic facing Shoprite SHP SJ South Africa Food & Staples Reta

31、iling Buy 6,254 ZAR 156.03 180.00 15.4% 17.2 3.3% 23.8% Nick Webster* Domestic facing Mr Price MRP SJ South Africa Specialty Retail Hold 4,461 ZAR 233.02 236.00 1.3% 22.5 2.8% 27.3% Nick Webster* Domestic facing Netcare Ltd NTC SJ South Africa Health Care Providers Buy 1,505 ZAR 15.50 16.50 6.5% 22.

32、0 3.0% 9.7% Raj Sinha* Domestic facing Bidvest Group Ltd BVT SJ South Africa Conglomerates Buy 4,844 ZAR 196.07 220.00 12.2% 14.5 3.1% 18.4% Nick Webster* Domestic facing Note: Price as of 1 June 2021 | Source: Refinitiv Datastream, HSBC estimates Multi-Asset Emerging Markets June 2021 4 This report

33、 focuses on global infrastructure spending and its EM beneficiaries. We identify key themes and preferred stock market ideas around these. A year ago we published a document called The EM landscape post-COVID-19 (John Lomax et al, June 2020). We argued that globally there was likely to be an increas

34、e in infrastructure spending to address some of the fault lines exacerbated by the virus most notably unemployment and income inequality. We asked a wide range of analysts to write about this and how they saw this playing out for different countries and sectors. Clearly, the infrastructure story has

35、 gathered steam and if anything is playing out more strongly than we expected, not least because of the Democratic Partys victories in last years US elections. Partly because of these, in addition to the economic concerns we saw motivating infrastructure spend, the need to address climate change has

36、 added a very significant layer to the story. The Green agenda complements more cyclical economic imperatives. The aim, as the White House puts it, is not just to build back the way things were before, but to build back better. Similar plans have been drawn up in other parts of the developed world w

37、ith similar objectives. This document updates our thoughts from last year and we have again asked many different economists and analysts from HSBC to offer their perspectives on this subject. Infrastructure spending and commodity prices There are very important links between infrastructure spending

38、and commodity prices infrastructure is a key driver of the demand for commodities. Therefore, it is worth looking for potential stock market plays on both. Since a big part of likely future infrastructure spend will take place in the developed world, higher commodity prices are one of the main (alth

39、ough far from only) ways in which the economic benefits are also experienced in developing countries. In this context, there has been a lively debate recently about whether there is likely to be a new commodity “super-cycle” in the style of the early 2000s. In a sense, a “super-cycle” in infrastruct

40、ure spending would be needed to underwrite the same in commodity prices. In general, this seems unlikely (see pages 28-30). The world economy was very strong in the early 2000s; and the long Chinese infrastructure boom which followed its entry into the WTO was clearly very supportive for commodity p

41、rices. It is difficult to believe that this experience will be repeated. In particular, the constraint on global economic growth from elevated levels of public sector debt are much greater. One important caveat, however, lies in green infrastructure, where a super-cycle” seems rather likely. Here, i

42、t is worth noting that this creates very different paths for the traditional hydrocarbon and metals sectors, particularly those focussed on clean technology. However, even outside green infrastructure, while a “super-cycle” may be less Introduction The global infrastructure story traditional and gre

43、en will drive EM equities both directly and indirectly through higher metal prices In this report we identify a broad range of stocks that could be beneficiaries of this theme John Lomax* Head of Global Emerging Markets Equity Strategy HSBC Bank plc +44 20 7992 3712 Aseem Madan* Associate Bangalore

44、 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations There are very important links between infrastructure spending and commodity prices 5 Multi-Asset Emerging Markets June 2021 plausible, an extended infrastructure and metals

45、 upswing is more than feasible and that is all that is required to underpin our investment thesis. In particular, it is likely that globally, state-led and co-ordinated infrastructure and investment spending remains strong for an extended period both to encourage flaccid economic growth and also to

46、address climate change. As regards the total infrastructure spend, it is worth considering the transition between a prospective fall in Chinese spending and a potential increase in spending in the US and EU. The big thrust in infrastructure spend may be primarily coming in DM (although mainland Chin

47、a will remain important) but there are numerous ways to play the story in EM equity markets. Hopes that a strong rebound in Chinese consumption could allow infrastructure/ investment spending to be quickly faded have dimmed somewhat. From a secular perspective, mainland China may be transitioning aw

48、ay from relying on manufacturing exports and investment towards service-sector led growth, which would be less supportive for commodities, but within that, the COVID-19 interruption has been acute. A relatively anaemic consumption revival instead suggests that the spending boost will remain in place

49、 for a while to come. There is likely to be some re-orientation away from a frothy property market towards manufacturing investment (which will still support commodity prices) but macro rebalancing towards consumption is unlikely to be rapid Prospective strength in infrastructure spending is highlig

50、hted by local government bond issuance. Its likely medium-term underpin is an important component of the 14th five-year plan. (see pages 17-19). Of course, at some point Chinese rebalancing is likely to occur, and infrastructure spending could be somewhat scaled back, but by then it should be accele

51、rating in the West; there are two primary elements to this; most importantly the American jobs plan, but also the EU next generation fund. Of course, there are different elements to both of these which relate to both hard and soft, traditional and green, infrastructure. Figuring out the balance betw

52、een these different components is very difficult especially for the American jobs plan, not least because the legislation has yet to be passed by either Congress or Senate and the Democratic party only has a slender majority so it is far from clear what compromises will have to made in order to pass

53、 the legislation. So there is little point in getting too granular. Nevertheless, the amounts of money involved are very large and the market may be understating the prospects of significant infrastructure spending (and accordingly substantial commodity price support) in the years ahead. It is possi

54、ble to exaggerate the importance of Chinese infrastructure expenditure, which is likely to gradually decline over time and underplay the scale of the potential Western spend simply because historically, the former has been much more impressive. In mainland China, as subways, railways systems and roa

55、ds have been constructed in the past two decades, the need for and productivity of additional spending on infrastructure has fallen. It is worth noting that Chinese infrastructure spending played a much smaller role in getting the Chinese economy back on track again after COVID-19 than it did after

56、the Global Financial Crisis (GFC) after 2009, when a massive fiscal stimulus program with infrastructure at its heart was rolled out. Chinese infrastructure spending as a percentage of GDP is now about a half of what it was in the aftermath of the GFC. Nevertheless, within EM, Chinese infrastructure

57、 is still a worthwhile theme and on pages 35-41 we outline potential material, industrial, energy and ESG beneficiaries. Herald van der Linde, HSBCs Asian equity strategist, identifies possible Asia ex China exposure on pages 42-44. Rather lacklustre Chinese consumption growth suggests the need for

58、ongoing infrastructure support Multi-Asset Emerging Markets June 2021 6 Spending proposals in the American Jobs Plan Budgetary impact over eight years, USDbn Investments in transportation infrastructure 621 Investments in domestic manufacturing, research and development, and job training initiatives

59、 590 Expand home care services and provide additional support for care workers 400 Clean energy tax credits 400 Improve housing stock, schools, child care facilities, Veterans Affairs (VA) hospitals and federal buildings 328 Invest in broadband, electrical grid, and clean drinking water 311 Total 26

60、50 Source: Committee for a Responsible Federal Budget, White House fact sheet: 31 march 2021 By comparison, the US/ European plans look large relative to recent history in which infrastructure spending has been desultory. The American jobs plan, as originally formulated envisaged an overall spend ov

61、er USD2trn or 1% of GDP every year for eight years. There is considerable uncertainty about the size and scope of what bill will ultimately be passed, although whatever its final formulation it is likely to be meaningful (see pages 18-19). The EU next generation fund amounts to EUR750bn or EUR150bn/

62、year for 5 years. By 2025 this could boost EU GDP by just short of 1.5ppt. Directly within emerging markets, the CE3 countries should benefit (see pages 20-22). Of course, it would be nice to link the spending directly to commodity inputs but this is impossible because its not at all clear which pro

63、jects will be undertaken. Even more than in the US, the primary thrust of the EU next generation fund is towards green infrastructure. Yet the general point is clear. Chinese infrastructure/ investment spending will decline only slowly, and even in the medium-term will remain a significant growth su

64、pport. As it does decrease, the increase in US/EU infrastructure has scope to provide a considerable offset. The global infrastructure underpin to metal prices is likely to remain robust. Next generation EU (NGEU) fund impact on GDP Source: HSBC calculations based on draft budget plans. Green infras

65、tructure spending As already highlighted, investment in green infrastructure is clearly a particularly important category within the aggregate infrastructure spend (see Wai Shin pages 13-14) Many countries and indeed regions, cities and companies, including some in the developing world, have zero ne

66、t emission targets for around mid-century, although the quality of these commitments varies greatly (“Taking stock: a global assessment of net zero target”, The Energy and Climate Intelligence Unit and Oxford Net Zero”, March 2021). Still, the pace at which net zero targets have proliferated through

67、 the past three years would not have been easy to predict, especially not the commitment of the 3 biggest emitters the USD, EU and mainland China. With faster 0.00.51.01.52.02.53.00.00.51.01.52.02.53.02021e2022e2023e2024e2025eEU/eurozoneItalySpainNGEU: impact on GDP levelPptPptUS/European infrastruc

68、ture plans are large relative to history Green infrastructure spending will be particularly important 7 Multi-Asset Emerging Markets June 2021 population and economic growth plus ongoing urbanisation in much of EM outside China, emission rates will inevitably be higher and will very likely rise furt

69、her. There are a range of direct equity market beneficiaries, particularly in mainland China, some of which we have already alluded to page 42). For EM stock markets, however, a big part of the impact for the time being appears indirect and will, in our view be felt in the material sector. The thema

70、tic discussion around this is on pages 45-48. In this context, Paris Accord targets could put significant upward pressure on some mineral prices. The central point is that an energy system based on clean technology requires many more mineral inputs than one fuelled by traditional hydrocarbon resourc

71、es (see “The role of critical minerals in clean energy transitions”, IEA, May 2021) “Our basic assessment suggests that a concerted effort to reach the goals of the Paris Accord (climate change at well below 2 degrees C temperature rise) would mean a quadrupling of mineral requirements for clean ene

72、rgy technology by 2040.” Under this IEA scenario, lithium demand would rise 40x, graphite, cobalt and nickel 20-25x and copper demand would more than double. Platinum would also be part of this story (see pages 47-48). As an illustration, a typical electric car requires six times the mineral inputs

73、of a conventional car, or an offshore wind power plant needs nine times more mineral content than a gas-fired power plant. Green infrastructure spending, with little doubt, provides the strongest and most structural catalyst for the commodity story and it benefits a limited number of metals, for whi

74、ch it points to a positive pricing environment. Within the above matrix, copper and PGMs have the most country macro significance (Copper disproportionately benefits the Andean region and PGMs South Africa); potential rises in other mineral prices are likely to have a more stock specific impact. Cou

75、ld the prices of key mineral inputs rise so much that this jeopardizes the de-carbonisation process? It seems unlikely given the political capital invested in this, alongside the potential costs of climate change. Traditional infrastructure spending But the infrastructure story is not just green, it

76、 is also traditional and this will support a broader range of commodity prices including, for example, iron ore. So the Biden Administrations jobs plan (as originally formulated) includes USD621bn dedicated to rebuilding the countrys roads, bridges, ports and rail systems; in fact, this is the large

77、st single component and arguably politically it may be the easiest component of the plan on which to find agreement, since it has more scope to garner Republican support. While Green infrastructure could be seen as a structural imperative, the prospective traditional infrastructure push is more of a

78、 counter-cyclical measure. In the near-term, prices may be volatile given Chinese official measures to defuse price pressure (see pages 35-36), but longer-term fundamental demand support should be resilient. Plus, it is worth noting that this year iron ore prices have actually increased as much as t

79、he copper price. There may not be the same structural underpin as with the clean-technology metal plays, but it is still important. Supply-side outlook and metal prices Metal prices are also likely to be supported by developments on the supply-side. There has been a sustained period of low investmen

80、t in the minerals sector, with the last investment boom ending in 2012 (see pages 28-30). Low investment in the capacity to produce metals is likely to support metal prices generally. However looking forward, it is critical to disaggregate the overall picture and look at the outlook for different pa

81、rts of the resource sector including energy, because this suggests very different behaviour from different parts of the commodity complex. The IEA have recently argued that in a scenario focussed on net zero emissions by 2025, no new oil and gas fields would be approved for development and no new co

82、al mines or mine extensions would be required (“Net zero by 2050”, IEA, May 2021). HSBC argues in relation to the IEA report that “it is not a forecast but crucially demonstrates technical feasibility potentially creating new expectations” (Energy and Climate Watch, Tarek Soliman, 20 May). Certainly

83、, the and will put particular upward pressure on the associated mineral inputs But traditional infrastructure spending will also be important Developments on the supply-side will also be important in shaping the commodity price outlook Multi-Asset Emerging Markets June 2021 8 IEA scenario is likely

84、to be at least an indicator of the broad future trend. Outside the energy sector, by contrast, a tremendous expansion is required in supply capacity for the mineral inputs to clean energy technologies. Here there is a very real prospect of supply bottlenecks; a potentially durably tight supply-side

85、should, in our view tend to support prices, particularly for the clean energy plays. Mining investment has been weak Source: Company reports, HSBC estimates Broad infrastructure/commodity price links, both traditional and green, create opportunities across EM stock markets, particularly in EEMEA and

86、 LatAm. We discuss both direct plays in the material sector (pages 45-48) and indirect domestic-facing plays in commodity markets (particularly Brazil and South Africa) which have scope to additionally benefit from high metal prices. At some point Andean markets (especially Chile) should also benefi

87、t, although at the time of writing, political risk is a constraint (see pages 56-65). Future cities “Energy transition” is one of HSBCs nine big long-term investment themes (New horizons for 2021, David May, 17 May) another is “Future cities”. This too will add to the infrastructure thesis. Cities a

88、re facing a different future after the pandemic, as a greater appreciation of space, quality of life and remote learning change their allure. There are new challenges and demands for infrastructure spending around transportation, building usage and urban design (see pages 25-27). There is clearly an

89、 overlap between our “future cities” concept and the green infrastructure impulse. In general, change is likely to be more profound in DM than EM. In EM, generally speaking fewer jobs are in professional services or other remote-friendly roles so it could be argued that there is less need for change

90、 in patterns of urban design. Nevertheless, there are a number of examples of potential changes in urban landscape in EM. Creating new cities requires both vision and an ability to finance that vision and some of the strongest urban development prospects globally may be in the Gulf, despite or perha

91、ps because of the long-term outlook for oil (and the need to diversify). One example is Dubai with the recent release of the 2040 Urban Master Plan. In terms of the scope for potential change, however, Riyadh could turn out to be an even better example since it comes, in development terms, from a lo

92、wer starting point. The new corporate investment program (Shareek) could be a tool for implementing this vision (see pages 50-55). There are also good examples of HSBCs “future cities” theme outside the Gulf. Thailand, for example, aims to have 100 smart cities by 2022. While this document is primar

93、ily aimed at an equity audience, the green bond market could also be a significant “future cities” beneficiary (see page 25). 007080902003200420052006200720082009200001920202021e2022e2023eUSDbnAALBHPGLEN/XTARIOS32ARIASREXXKIOValeAntoKAZSCCOResource compani

94、es capital expenditureFuture Cities complements the broad infrastructure narrative 9 Multi-Asset Emerging Markets June 2021 Commodity prices, inflation and whats needed to make the infrastructure story attractive Clearly one of the risks to our clement metals environment is that higher commodity pri

95、ces feed through into inflation, particularly US inflation, causing the Fed to tighten monetary policy leading to macro slowdown, which could then drag commodity prices lower. In fact, while there has been quite a high correlation between commodity prices and headline US inflation over the past ten

96、years, the correlation with core inflation is much lower. In the 1970s higher commodity prices did fuel an inflationary surge primarily because the labour market was much less flexible which allowed a wage-price spiral to develop. Today, with globalisation, the decline in unionisation, disruptive te

97、chnology and the gig economy, the labour market is much more flexible so a wage-price spiral is much less likely to develop. There may be a step jump in the price level but there is unlikely to be persistent inflation. In addition, the positive case for metal prices is, in our view, stronger than th

98、at for oil which has a bigger impact on US inflation HSBC is not expecting oil prices to move significantly higher from where they are today (Oil things considered, Gordon Gray, 3 May). Energy transition, which creates tremendous implicit support for some mineral prices is likely long-term to weigh

99、on oil. Without meaningful US inflation or monetary tightening, a buoyant metal price environment has scope to be more sustainable (see pages 11-12). Last 10y correlation table Correlation coefficient US CPI vs Industrial metals 0.54 US Core CPI vs Industrial metals 0.04 US CPI vs Brent 0.86 US Core

100、 CPI vs Brent 0.40 US CPI vs CRB 0.66 US Core CPI vs CRB 0.13 Source: Refinitiv Datastream, Bloomberg, HSBC, data as at 31 May 2021 In this context, an important point on metal prices, is that prices do not need to move higher to make direct and indeed indirect plays on the story attractive. Across

101、most metals, forward curves are in backwardation. Plus, the prices at least used by analysts in HSBC models are significantly below spot. Prices simply need just to fall less quickly than implied by current forward prices to make our thesis in this report potentially rewarding. The infrastructure th

102、esis discussed here suggests that this is quite likely. A new aggregate commodities “super-cycle” is very definitely not required and the metal plays on clean energy do indeed have scope to experience a “super-cycle”; elsewhere simply an extended cycle could support other metal prices. Overall, we c

103、ontinue to believe that infrastructure spending in a range of different guises will be an important driver for global growth and create strong opportunities across various different EM stock markets. Commodity price forecast _ 2021 (average) _ Metal Unit Current HSBC Consensus Long Term Copper USD/l

104、b 4.53 4.05 3.85 3.00 Iron ore fines (CIF) USD/t 193.8 161.8 144.0 65.0 Gold USD/oz 1897 1830 1775 1600 Platinum USD/oz 1196 1160 1205 1300 Palladium USD/oz 2784 2740 2532 1190 Rhodium USD/oz 22750 23087 NA 4760 Source: Bloomberg, HSBC Metals Quarterly Q2 2021: Digging Deeper into deficits, 27 April

105、, 2021, Long term forecast are HSBC Buoyant metal prices unlikely to fuel inflation Multi-Asset Emerging Markets June 2021 10 Part one: Trends in Global infrastructure spending Part one of this report outlines and evaluates prospective trends infrastructure spending. We look at this both geographica

106、lly (mainland China, US, EU) and also by spend by category (ESG, urban development). Since an important part of the transmissions mechanism to EM comes through higher commodity prices, this is also discussed 11 Multi-Asset Emerging Markets June 2021 The path to recovery should go through investment

107、The focus in the global reflation narrative might have shifted towards inflation (GEMs Investor: Reflation and its discontents, 11 April 2021), but this does not change the fact that global economic activity is recovering strongly following last years COVID-19 slump. We have already seen remarkable

108、Q1 GDP growth rates across many economies, including in EM, and its likely that the recovery in global activity will gather pace given the low base, as well as the ongoing vaccination efforts that should support consumption. But the rebound in economic activity will not be a function of base effects

109、 and consumption only. Gross fixed capital formation should also pick up, thanks to better demand prospects. As a matter of fact, EM investments have already bottomed out in Q2 2020, and early indicators suggest that gross fixed capital formation is likely to accelerate further in the near term. Mor

110、eover, the focus seems to be shifting towards infrastructure spending in many economies, including the likes of US, Eurozone, mainland China, and India, which should support both the near and longer term growth outlook, as well as help with total factor productivity, we believe. Many large EM econom

111、ies are commodity exporters on a net basis as at 2019 Source: IMF, HSBC -10-5051015202530AEDSARRUBPENCLPCOPZARBRLARSUAHIDRMYRRONMXNILSINRPLNHUFTHBCZKCNYEGPPHPTRYVNDKRWTWDEnergyHardSoftTotal (% of GDP)EM outlook and commodity producing countries Global economic activity is set to rebound following la

112、st years COVID-19 led slump and many economies are announcing aggressive infrastructure investment A pick up in investment should support commodity producing EM economies, along with a rebound in total factor productivity Dr. Murat Ulgen Global Head of Emerging Markets Research HSBC Bank plc +44 20

113、 7991 6782 Ali Cakiroglu Emerging Markets Strategist HSBC Bank plc +44 20 7991 0547 The growth recovery should also be driven by a pick-up in gross fixed capital formation Multi-Asset Emerging Markets June 2021 12 Meanwhile, another factor that could support EM is the outlook in commodity prices, w

114、hich have seen a sharp recovery after last years slump. Global commodity prices, with reference to the CRB Commodity Index, have reached their highest level since 2011 on an aggregate basis, with all major commodities (metals, agricultural, energy) seeing sizeable surges. Many EM economies are net c

115、ommodity exporters, which should mean an improvement in terms of trade across the region. As a matter of fact, there has already been some further improvement in overall terms of trade in commodity exporting EMs over the last couple of months. It is likely that this will accelerate further in the ne

116、ar term, though we are yet to see its impact particularly on the FX front. The pick-up in growth, and particularly in gross fixed capital formation, along with improving terms of trade in many large EMs should also support our constructive view on growth sensitive EM assets, as well as commodity lin

117、ked stories. We have long argued that a growing world economy -as opposed to a recessionary slump- should be good for EM returns in absolute terms, even though EM might start as a growth underperformer. As a result, our preference remains for equities over fixed income. Gross fixed capital formation

118、 has already bottomed out in EM Stronger investment growth should support both the near and longer term growth outlook Source: Refinitiv Datastream, IHS Markit, HSBC Source: Penn World Tables, HSBC calculations There has been a sharp divergence between the improvement in commodity ToT and commodity

119、FX EM equities offer better return prospects compared to bonds Source: Bloomberg, HSBC Source: Bloomberg, HSBC -6-4-20246810-9-6-30369121508 09 10 11 12 13 14 15 16 17 18 19 20 21EM gross fixed capital formation (y/y %)New orders less inventories (chg. in trend, 1Q frw, RHS)-8-6-4-2024601

120、315171921LatAmAsiaCEEMEAEM TFP (%)800540718192021EM commodity terms of tradeEM commodity FX (2010=100, inverted, RHS)34567891011Jan-11Jan-13Jan-15Jan-17Jan-19Jan-21EM EXD yield (%)EM LCD yield (%)EM earnings yields (%)Commodity prices should also be suppor

121、tive of EM given that many economies are net commodity exporters Our preference remains for growth sensitive assets in EM, i.e., equities over bonds 13 Multi-Asset Emerging Markets June 2021 The transition towards more sustainable infrastructure Easy to plan: There have been many announcements on gr

122、eening infrastructure around the world although many of the plans face political challenges in their current form, and require scaling up if countries are to align to a pathway consistent with a net zero emissions by 2050. Hard to execute: 2021 is shaping up to be a pivotal year for climate change a

123、s countries seek to enhance their 2030 climate targets. We expect more green infrastructure announcements in the run up to the climate negotiations, COP26, in November. Parties have been asked to bring actions demonstrable policies which will lower the emissions profile as well as embed more climate

124、 resilience into national infrastructure. Europe: The European Commissions Green Deal covers many green infrastructure areas such as transiting to cleaner energy, cleaner construction, and more sustainable transport. This transition is supported by the traditionally harder-to-abate sectors such as s

125、teel, cement and chemicals as these facilitate the transformation of the industrial base of the bloc. UK: The governments ten-point green plan will mobilise GBP12bn of government investment to further stimulate three times that amount from the private sector. Many of the associated themes represent

126、green infrastructure: offshore wind, hydrogen production, new nuclear power, insulating buildings as well as carbon capture and storage. The UK has set ambitious climate targets and is steering its spending towards a net zero pathway. US: The USD2trn American Jobs Plan touches major infrastructure s

127、egments but importantly has climate change mitigation and resilience at its heart. For example: Transportation infrastructure - roads, bridges, ports, airports, to be more resilient to climate change risks with some USD174bn earmarked for EVs. Electricity infrastructure - to improve resilience of en

128、ergy grid and improve air quality in line with a zero-carbon power sector by 2035. Commercial buildings and housing infrastructure to build energy efficient and resilient homes and buildings, including retrofitting to make homes more sustainable. Water infrastructure - to modernize aging water syste

129、ms in the US as water availability changes with warmer temperatures. An ESG perspective on green infrastructure Green initiatives are part of plans to stimulate the economy however, mobilising private capital is still challenging We expect more economies to lay out sustainable infrastructure plans a

130、s they enhance climate targets ahead of COP26 Political will may be a hurdle to aligning with net zero trajectories Wai-Shin Chan, CFA Head, Climate Change Centre; Head, ESG Research The Hongkong and Shanghai Banking Corporation Limited .hk +852 2822 4870 Multi-Asset Emerging Markets June 2021 14 Em

131、erging Markets: In ASEAN, we are seeing a resurgent interest in renewable energy. Mainland Chinas aim to achieve carbon neutrality by 2060 should be a boon for renewable and other sustainable infrastructure. Across Asia, other green infrastructure themes include more efficient transmission and distr

132、ibution systems, waste to energy and also energy storage solutions. 15 Multi-Asset Emerging Markets June 2021 Infrastructure was among the first sectors to rebound Theres no doubt that mainland Chinas economy is recovering, with GDP growth reaching over 18% y-o-y in the first quarter of 2021. Part o

133、f this has been fuelled by countercyclical fiscal policies to support more public spending on infrastructure. Last year, in response to the pandemic, the government lifted the quota for issuance of special local government bonds to a record high of RMB3.75trn or 3.7% of 2020 GDP. Coupled with the re

134、strictions limiting the use of proceeds of special local government bonds for real estate related projects (e.g. land reserves) since 2019, this helped push infrastructure investment up to be one of the first areas to rebound. Infrastructure investment reached an average of 6.7% y-o-y in H2 2020. Ma

135、inland Chinas economic recovery is well underway with infrastructure investment being one of the first sectors to recover Source: CEIC, HSBC, Dash lines denotes HSBC forecasts. Source: CEIC, HSBC -10-505101520Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22GDP growth, % % y-o-y% q-o-q% y-o-y% q-o-qF

136、orecast-30-20-Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21-30-20-FAI, % y-o-y, 3mmaFAI, % y-o-y, 3mmaPropertyInfrastructure (incl utilities)Total FAIManufacturing (incl industrial)Mainland China: infrastructure will continue to support growth Infrastructure spending was a c

137、ounter cyclical tool in response to the pandemic last year, becoming one of the first sectors to rebound A larger than expected fiscal boost in special local government bond issuance means infrastructure investment will stay resilient this year The 14th Five Year Plan focuses on industrial upgrading

138、 and new infrastructure development which will keep infrastructure investment buoyant in the medium term Qu Hongbin Co-head Asian Econ Research, Chief China Economist The Hongkong and Shanghai Banking Corporation Limited .hk +852 2822 2025 Erin Xin Economist, Greater China The Hongkong and Shanghai

139、Banking Corporation Limited .hk +852 2996 6975 Jingyang Chen Economist, Greater China The Hongkong and Shanghai Banking Corporation Limited .hk +852 2996 6558 Multi-Asset Emerging Markets June 2021 16 The strength of infrastructure spending in 2021 has persisted, and infrastructure investment growth

140、 reached 18.4% in the period from January to April over the year prior. Part of the reason for the strong growth rate this year is due to a low base last year. However, even stripping out the base effect, infrastructure investment is still higher than pre-pandemic levels. Using the two year CAGR, in

141、frastructure investment growth reached 6.6% in March and 3.8% in April. This is higher than the pre-pandemic levels as growth only reached 4.1% in March and 3.7% y-o-y in April in 2019. Infrastructure investment growth will be resilient this year We expect that growth will continue to be strong this

142、 year due in part to a larger than expected issuance of special local government bonds of RMB3.65trn (3.3% of 2021 forecasted GDP) announced at this years Nationals Peoples Congress (see: China 2021 NPC: Budget report, 8 March 2021). This is a touch lower than 2020s issuance, but it is important to

143、remember that much of the recovery had already occurred by then end of 2020, showing that the issuance is sizeable and will be supportive of growth this year. Additionally, in contrast to prior years, there was no front loading of the quota for special local government bonds, which means that issuan

144、ce will be allocated over a shorter time frame (from April to end year) and on an average monthly basis will provide a larger boost. That said, not all of the issuance this year will go to infrastructure development, as a portion will likely be used to further reduce off-balance sheet financing and

145、alleviate some hidden debt risks. Where will the issuance go for infrastructure spending? Looking at the breakdown of issuance in 2020, it was dedicated to a mix of both traditional infrastructure (e.g. transportation, industrial zone construction, municipal facility upgrading) and new infrastructur

146、e (e.g. new energy vehicle facilities, ICT/5G deployment) (see chart below). This year, we will likely continue to see this mix play out this year. Owing to base effects, infrastructure growth has been strong so far, though we will likely see softer growth rates relative to the strong double digit g

147、rowth seen in Q1 as a higher base kicks in for the second half of the year. While growth may soften, there is unlikely to be a sharp drop off in growth because of the strong issuance of special local government bonds. Breakdown of SLGB use in 2020 Breakdown of SLGB use in 2019 Note: New infrastructu

148、re mainly denotes projects related to smart city and new energy vehicle facility SLGB: special local government bond Source: Wind, local news sources, HSBC Source: Wind, local news sources, HSBC SLGB: special local government bond 21%15%9%9%9%9%7%5%4%12%TransportationAffordable housingIndustrial zon

149、eMunicipal facilityEnvironmentHealthcare facilityNew infrastructureCulture & tourismEducationOthers39%36%23%2%Affordable housingLand reservesInfrastructureOthers 17 Multi-Asset Emerging Markets June 2021 Key areas of SLGB in 2021 Key areas Specific areas Transportation infrastructure Railways, toll

150、roads, airports, water transportation, urban rail transit Energy projects Natural gas pipeline networks, gas storage facilities, and power grid Agriculture, forestry and water conservancy Ecological environmental protection projects Urban sewage and garbage treatment facilities Social welfare Public

151、 health facilities, education, elderly care, cultural tourism Urban and rural cold chain logistics facilities Municipal administration Water supply, heating, gas supply National strategic projects (new) Beijing-Tianjin-Hebei Metropolitan Region, Yangtze River Economic Belt, One Belt One Road, Guangd

152、ong-Hong Kong-Macao Greater Bay Area, integration of the Yangtze River Delta, Hainan Free Trade Zone. Affordable housing projects (new) Affordable rental housing, old town redevelopment and shanty town renovation Source: Ministry of Finance, National Development and Reform Commission, HSBC Infrastru

153、cture investment will be buoyant in the medium term Moreover, within the 14th Five Year Plan, there is a renewed focus on industrial upgrading and development of urban centres and city clusters which means that in the medium term, infrastructure spending will likely remain resilient (see: Chinas new

154、 five year plan: All about technology and domestic market, 8 March 2021). The new five-year plan has a shift in focus back towards industrialization with the aim to keep the manufacturing share of the economy stable, and increased focus on new technologies that need the new infrastructure to go with

155、 it. This points to buoyant infrastructure development in the coming years and will stand in contrast to the period leading up to the pandemic when infrastructure investment growth had slowed considerably to under 5% in 2018 and 2019. In terms of specific focus areas, we think development of the 5G

156、network, industrial zone construction and new energy vehicle facilities will continue to be focuses of new infrastructure development. Meanwhile, traditional infrastructure like building of roads, highways, and airports as well as upgrading of city infrastructure will continue to be implemented to i

157、mprove connectivity between urban clusters and allow for continued urbanization. In all, we expect to see continued resilience infrastructure investment which in turn will help to drive longer term growth given the beneficial spillovers effects for productivity. Multi-Asset Emerging Markets June 202

158、1 18 Different proposals for infrastructure spending There continues to be considerable uncertainty about the potential size and scope of any infrastructure spending proposals that might be enacted in the US later this year (US Fiscal Policy: Q&A on Biden administrations latest plans, 14 April 2021)

159、. Infrastructure negotiations between the Joe Biden administration and Senate Republicans have been ongoing for the past month. It is not clear whether and when the administration might decide to pivot away from these discussions and instead pursue enactment of its proposals via budget reconciliatio

160、n, relying on support strictly from Democratic lawmakers. This would likely impact not only the magnitude of investments, but also the potential areas of focus. Therefore, it is important to track the details of the different types of investments that are under consideration. Depending on their form

161、, these investments would have different implications as far as the potential boost to demand for resources such as raw materials or labour. According to the Committee for a Responsible Federal Budget, the initial proposals that formed the Biden administrations American Jobs Plan in late March had a

162、 10-year budgetary cost of USD2.65trn. This included USD2.25trn in spending identified in the White Houses fact sheet, along with proposed clean energy tax credits with an estimated cost of USD400bn. Spending proposals in the American Jobs Plan Budgetary impact over eight years, USDbn Investments in

163、 transportation infrastructure 621 Investments in domestic manufacturing, research and development, and job training initiatives 590 Expand home care services and provide additional support for care workers 400 Clean energy tax credits 400 Improve housing stock, schools, child care facilities, Veter

164、ans Affairs (VA) hospitals and federal buildings 328 Invest in broadband, electrical grid, and clean drinking water 311 Total 2650 Source: Committee for a Responsible Federal Budget, White House fact sheet dated: 31 March 2021 According to the White House, the proposals to upgrade infrastructure, pr

165、omote domestic manufacturing, invest in basic research and science, shore up supply chains, and support home care services would amount to around 1% of GDP per year over eight years. This figure is a US infrastructure prospects and the American Jobs Plan The initial proposal for the American jobs pl

166、an had a budgetary cost of USD2.65trn It is not clear whether the Democratic Party will try and pass this through the budget reconciliation process or with bi-partisan support Ryan Wang US Economist HSBC Securities (USA) Inc. Ryan.W +1 212 525 3181 19 Multi-Asset Emerging Markets June 2021 useful be

167、nchmark for evaluating the various proposals and counterproposals that may emerge in the weeks and months ahead. The Congressional Budget Office currently projects nominal US GDP will reach USD23trn in fiscal year 2022. Therefore, as an approximation, 1% of GDP in 2022 would equate to USD230bn of in

168、cremental investment in that year. A proposed infrastructure framework released by Republican senators in late April would target a much narrower set of investments relative to the American Jobs Plan. Senator Shelley Moore Capito, the ranking member of the Senate Environment and Public Works Committ

169、ee, laid out a USD568bn proposal which would include additional spending on roads and bridges, public transit, rail, water systems, airports, and broadband infrastructure. Republican infrastructure framework released in late April Budgetary impact, USDbn Road and bridges 299 Public transit systems 6

170、1 Rail 20 Drinking water and wastewater 35 Safety 13 Ports and inland waterways 17 Airports 44 Broadband infrastructure 65 Water storage 14 Total 568 Source: Fact sheet released by Senator Shelley Moore Capito, 22 April 2021 Much of the spending in the Republican framework would overlap with the USD

171、621bn in proposed transportation infrastructure investments included in the Biden administrations American Jobs Plan. However, the Republican framework does not appear to include many other elements of the American Jobs Plan, such as USD174bn to support electrifying vehicles, USD590bn to support res

172、earch and development and domestic manufacturing, USD400bn for the caregiving economy, and USD126bn to help build energy efficient housing. Bipartisan negotiations have been ongoing for the past month but there remains a wide gap between the size of White House and Republican proposals. According to

173、 the Washington Post, the White House has suggested reducing its proposed package down to a size of USD1.7trn, while Republicans recently unveiled a USD1.0trn counterproposal. Judging by the size of the Republican proposal, we estimate it could involve incremental investments of around 0.5% to 0.6%

174、of GDP on a per year basis. Additional clarity on the path forward may begin to emerge over the course of the summer. Senate Majority Leader Chuck Schumer has indicated an intention to move forward on a major infrastructure spending bill in July, whether on bipartisan basis or otherwise. Therefore,

175、uncertainty about the potential size and form of infrastructure investments is likely to persist for a while longer, especially while the question of legislative approach remains unanswered. Multi-Asset Emerging Markets June 2021 20 Ready to roll EC to start issuing in July After one year since last

176、 Julys historical agreement, the EUR750bn Next Generation EU (NGEU) fund is ready to roll. With all countries having completed the parliamentary procedures to approve the fund, the European Commission (EC) should be in a position to start tapping the markets from July to raise the money (Next Genera

177、tion EU fund: Front loading, not so much, 14 April). As of 31 May 2021, 15 of the 27 EU countries have submitted their Recovery and Resilience Plans (RRPs) to the EC to be assessed. These includes the two largest recipients of the fund in absolute terms, Italy (EUR210bn between grants and loans) and

178、 Spain (EUR165bn, although Spain so far has only requested EUR70bn of grants). The EC has two months from the submission of the RRPs to assess it against the guidelines provided (for example that at least 37% of the resources should be devoted to the environmental transition and 20% to the digitalis

179、ation of the economy, as well as the need to include structural reforms alongside spending on investment to ensure NGEU also helps lift long-term growth potential). Once the EC has given the green light to the plan. the European Council has one month to approve it and the countries will then be enti

180、tled to receive 13% of total funds requested as advance payment. Although that might not happen immediately (the EC has said it will only issue about EUR15-20bn per month under the plan) some countries have already expressed the intention to provide bridge-financing issuing domestic debt to kick-sta

181、rt the projects. In its latest forecast (EC spring forecast: Optimism on all fronts, 12 May 2021), the EC expects EUR140bn of grants to be used across the EU between the second half of this year and 2022, around 1% of EU GDP and about 40% of the total grant allocation for the countries. This is broa

182、dly in line with our expectation of some EUR60bn of grants used this year and EUR100bn (refer charts on next page). A meaningful boost to growth The bulk of spending (around two-thirds) is on investment. The EC expects this to push public investment as a share of GDP to its highest level in more tha

183、n a decade, 3.5% of GDP in the EU this year and next (from 3.0% of GDP in 2019). According to the EC, the economic impact generated by the grants over this year and next will be around 1.2% of 2019 EU real GDP, with a fiscal multiplier of 1.2 (ie. for each euro spent, the economic impact generated i

184、s 1.2). The high multiplier reflects the fact that the bulk of spending will be on investment. Our own estimates are a little more cautious, taking into account that one-third of the money will still be spent on other measures with a lower impact on growth (eg. subsidies to households and firms and

185、transfers) and that even within the pot allocated to investments some money will have to be spent on salaries, administrative costs, and there could also be some crowding-out of private Next Generation EU The Next Generation EU fund is now ready to roll. .and countries are keen to spend money as qui

186、ckly as possible Infrastructure investment should get a huge boost, at least initially Fabio Balboni Senior Economist HSBC Bank plc +44 20 7992 0374 21 Multi-Asset Emerging Markets June 2021 investment. So we estimate an overall boost to the GDP level of around 0.6ppt by 2022 and just short of 1.5p

187、pt by 2025 for the EU (see Next Generation EU fund: Ready to roll, 3 February). Countries want to front-load the grants. .which should boost near-term growth Source: HSBC calculations based on HSBC forecasts. Source: HSBC calculations based on draft budget plans. Infrastructure plays a key role Spen

188、ding on infrastructure plays a key role in the RRPs, under many different categories. For example, the single biggest item of spending in the Italian RRP is railways (EUR25bn,10% of the total resources) focussing in particular to the extension of the high-speed network. Sustainable mobility more bro

189、adly plays a major role in the RRPs of many countries, including Italy and Spain, which has allocated EUR13bn to this (and should also be front-loaded relative to other spending areas). Infrastructure investment also contributes to the overarching goals of environmental transition and digital transf

190、ormation. For the former, the RRPs include large investments in the areas of renewable energies and water management systems. France for example wants to spend EUR7bn of its EUR41bn grants allocation in green infrastructure and mobility. For the latter, the development of the 5G network is a key pri

191、ority across all countries. Furthermore, infrastructure investment plays a key role in the support of the sectors hit hard by the crisis, such as the tourism sector, in support of the health care systems, while some countries also have specific priorities, such as improving the resilience of schools

192、 and roads to natural disasters in the case of Italy. So all in all, it is no surprise that when we consider which sectors are likely to get the biggest boost from the NGEU, at least in the near term, it is sectors such as the construction or the housing sector, while also the transport sector would

193、 be a major beneficiary (Italys Recovery Plan: The plan is done, now for the hard part, 27 April). Italian governments estimates of the boost from NGEU across different sectors Source: Italy Recovery and Resilience Plan. 0.00.20.40.60.81.0030609032425Grants% GDP (LHS)EU: NGEU grants profi

194、leEURbn% GDP0.00.51.01.52.02.53.00.00.51.01.52.02.53.0202242025EU/eurozoneItalySpainNGEU: impact on GDP levelPptPpt0.00.51.01.52.02.53.03.50.00.51.01.52.02.53.03.5ConstructionHousingRetailWholesaleEducationLegal/accountingFinancial servicesAccommodationservicesTransportIT/programmingPptCh

195、ange in value added by economic sectors due to NGEU (2021-26)Ppt Multi-Asset Emerging Markets June 2021 22 EU funding to support investment in the Central Europe post-COVID-19 recovery CE3 investment recovery will be substantially supported by the EU funding: the long-standing and ongoing cohesion p

196、olicy will continue to provide stable funding stream smoothing the business cycle and the new Recovery and Resilience Facility will provide the essential funding injection to support the regions recovery from the COVID-19 pandemic. In terms of how the money is spent there has been a general shift aw

197、ay from direct spending on transport infrastructure, that dominated in 2014-2020, to climate and digital transitions objectives. In particular, 37% of RRF funding needs to be allotted to support climate objective and 20% to the digitalization objective. That said, we would still expect a high level

198、of spending on hard infrastructure that supports climate objectives especially in the energy sector across production, transport, and consumption. This year, based on advance payments, CE3 can benefit from 0.4-0.7% of GDP funding injection from the EUs RRF grants. The total RRF grants amount from 3%

199、 of GDP in the Czech Republic to 5% in Poland and Hungary and come on top of 2021-27 cohesion policy funding worth 9% in the Czech Republic, 13% in Poland and 15% in Hungary. Agata Urbanska-Giner Economist HSBC Bank plc +44 20 7992 2774 The Recovery and Resilience Facility focused on climate and di

200、gital transition goals that are also mirrored in cohesion policys themes for green, digital, innovative EU *max allocation set at 6.8% of 2019 Gross National Income but HU/CZ have not announced any drawing, Romania seeks max allocation and Poland targets to draw on around 35% of the loans Source: Eu

201、ropean Commission Source: European Commission 3.14.94.56.505101520CZHUPLRORRF loans max*Other NextGeneration EURRF grants% GDP Next Generation EU funding allocations, 2018 910121416CZHUPLROCohesion funding 2021-2027% GDPCohesion policy funding 23 Multi-Asset Emerging Markets June 2021 Met

202、als prices have staged a strong recovery, and most of them are well above pre-COVID-19 levels. The strong recovery in demand, especially in mainland China, combined with supply disruptions have supported elevated price levels. Along with strong fundamentals, optimism around green infrastructure and

203、emission controls have also driven prices higher. We believe that the renewed interest in controlling emissions and achieving carbon neutrality will reshape the commodity market space in the coming years. We expect that these measures will benefit copper, nickel, cobalt and PGMs, while having an adv

204、erse impact on coal in the medium to long run. That said, drivers for each metal will be different based on their varied usages. EV driver for some of the base metals HSBC Auto analysts believe that the strong EV momentum of 2020 should continue in 2021e and beyond, with the launch of a large number

205、 of new models. New (dedicated) EV platforms, better fixed cost absorption over a larger number of vehicles and improvements in battery technology should help to push costs down and make EVs more affordable even without the benefit of government incentives. In particular, the faster growing BEV (bat

206、tery electric vehicle) market, which has 2-3x bigger battery capacity than PHEVs (plug-in hybrid electric vehicle), should help battery demand growth exceed the total EV unit growth rate. Nickel and cobalt are the two main metals (along with manganese and rare earth metals) which benefit from increa

207、sing adoption of EVs. Cobalt prices reached multi-year highs of USD94,800/t in early 2018 due to EV euphoria and concern over supply availability, while nickel prices have yet to witness a similar rally given the current lack of supply issues and smaller percentage of EV battery demand in the total

208、nickel market. Currently, EV is a nascent portion of total nickel demand, accounting for only 7% (2020) of the overall demand, however it remains a dominant growth driver and we expect it to account for 19% of demand by 2025, and to continue increasing further later in the decade. For the cobalt mar

209、ket, we estimate that demand from EVs will quadruple by 2025. That said, it is not just the EV penetration, but also ever changing technology and battery capacity that will play an important role in driving demand for these metals. There have been considerable efforts to reduce cobalt content in bat

210、teries (i.e. moving to 811 battery technology), which could thus lead to less demand growth than anticipated. Metals & mining a selective green infrastructure play The interest in green energy and achieving carbon neutrality will reshape metals demand in the coming years EVs and increased use of ren

211、ewables will be the key drivers; demand for coal to be adversely impacted Copper, nickel, cobalt and PGMs are the main beneficiaries; though drivers will vary for each of these metals Jonathan Brandt, CFA Analyst, GEMs ex-Asia Metals & Mining/Pulp & Paper HSBC Securities (USA) Inc. +1 212 525 4499

212、Leroy Mnguni* Analyst, Metals & Mining HSBC Securities (South Africa) (Pty) Ltd +27 11 676 4224 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2021 24 Copper is another beneficiary of in

213、creasing use of EVs as copper intensity in EVs is 2-4x greater than in ICEs. Currently, EVs only account for c1% of the total copper consumption, but we expect it to be one of the key drivers for demand in the long term. Electrolysers to benefit PGMs demand Renewed interest in hydrogen is likely to

214、drive multi-fold growth in electrolyser capacity. Electrolysers lie at the heart of green hydrogen production. We estimate global electrolyser capacity will reach 126GW by 2030e from low single digits today. Out of the three prominent existing electrolysis technologies, we expect the share of PEM (P

215、roton Exchange Membrane) electrolysers to increase gradually as the technology matures and economies of scale start to kick in. PEM uses catalyst coated membranes (CCM) where the catalyst layers are directly coated as electrodes on both the sides of the membrane. These layers are made up of precious

216、, platinum group metals (PGMs). Iridium oxide is used at the anode and platinum is used at the cathode. In addition, PGMs are used in protective layers over other stack components. Currently, a typical PEM electrolyser utilises about 45.9 oz/MW of iridium and 17.6 oz/MW of platinum. Thus, we estimat

217、e that Platinum demand from PEMs could reach to c264koz in 2030e from c6koz in 2021e. As highlighted above, Iridium is one of the key components and its scarcity could also potentially pose a bottleneck to PEM development in the long run. Fuel cells, which convert pure hydrogen into electricity (and

218、 water), are also set to drive PGM demand. PEM fuel cells (essentially the reverse of the PEM electrolyser where hydrogen is converted back into electricity) also require platinum as a catalyst and are the technology of choice for hydrogen-fuelled fuel cell electric vehicles (FCEV). Increasing penet

219、ration of FCEV will also require rising platinum demand (although lower demand for catalytic converters in ICE vehicles will act as an offset). Platinum loading has been coming down in PEM fuel cells over the past decade and, although companies are working to remove it entirely, we expect platinum t

220、o remain an essential component of PEM fuel cells over the next decade at least. We estimate total platinum requirement of 220koz by 2030 in Europe, based on a platinum loading of 3.5oz/MW and FCEVs to derive a total requirement of 63GW of stacks by 2030 in Europe. For details, please see, Energy Tr

221、ansition: Hydrogen impact on PGMs, 15 February 2021. Focus on renewables and charging infrastructure to help copper Apart from EV batteries and uses in electrolysers, the transition towards greener energy is also impacting demand for various metals given their uses across the value chain. Intuitivel

222、y, a shift to green energy translates into a shrinking demand for coal. On the other hand, the increasing share of renewables like solar and wind will require more installations. These installations are more copper intensive compared with other power generation capacity. For instance, coal and oil b

223、ased power generation capacity has a copper intensity of 2t/mw, while the intensity for solar (4t/mw), onshore wind turbines (5t/mw) and offshore wind turbines (15t/mw) are significantly higher. Currently, renewable energy accounts for c2.5% of total copper consumption (2020). But the demand from re

224、newables for copper is expected to pick-up as they gain share in the overall power generation capacity. Another impact from increasing penetration of EVs is the requirement of EV charging infrastructure. There were c6m public chargers worldwide at the end of 2019. The number is forecast to grow to c

225、60m by the end of 2030e and close to c300m by 2040e (source: Bloomberg New Energy Finance). Each EV charge could require c1kg of copper depending on capacity and size. 25 Multi-Asset Emerging Markets June 2021 Urbanisation to be different, not over The pandemic has meant many people have started to

226、declare the end of big cities, particularly in the developed world, as a result of more remote working meaning that fewer people will want to live in or travel to them on a regular basis. As we said in Future Cities: The changing shape of urbanisation, 28 April 2021, we believe that urbanisation tre

227、nds will persist in both the emerging and developed world despite these changes. In the emerging world, many jobs are not able to be done remotely and cities are still the most attractive place to live in terms of access to jobs, education, healthcare and high speed internet. For that reason, we exp

228、ect the steady growth in urban areas to continue, especially given the low starting point in terms of the size of the urban population today. As a result, the need to keep building will be there. Some of this will be on continuing to support these growing populations with housing and transportation

229、in the biggest cities, but smaller urban areas could be well-placed to grow quickly if they can provide the appropriate infrastructure, jobs and opportunities. EM urban investment should keep growing quickly, at least for now. Urbanisation is still low in many emerging markets Source: UN Urbanisatio

230、n Prospects 0070809005060708090100ArgentinaJapanSwedenBrazilChileNew ZealandAustraliaSaudi ArabiaUKNorwayUSColombiaFranceMexicoSpainCanadaKoreaMalaysiaTurkeyGermanyRussiaSwitzerlandItalySouth AfricaMainland ChinaIndonesiaPolandThailandPhilippinesIndia%Share of population living

231、 in urban areas20302020Future cities: the changing shape of urbanisation We expect EM urbanisation to continue, with fewer remote jobs In the developed world, smaller urban areas may be the winners but as urban areas compete for people, expect much more investment James Pomeroy Economist HSBC Bank p

232、lc +44 20 7991 6714 Multi-Asset Emerging Markets June 2021 26 In the developed world, the shift will be subtler. While rural areas are a more viable alternative to cities due to the still-present availability of many key amenities, they arent perfect substitutes. Internet speeds are typically much

233、slower (key for video calls) and rural areas dont have access to the cultural activities that people want to be close to, particularly younger generations. A 2015 survey from Centre for Cities in the UK, based on a YouGov poll, showed that for city centre dwellers, roughly 40% of the respondents wan

234、ted to be close to restaurants, leisure and culture, while roughly 30% said that one of their primary reasons for living in cities was due to being close to shops, work or access to public transport1. There are many draws to urban living beyond proximity to work. And so the cities that win may be di

235、fferent. Across the world, the fastest growing cities are likely to be smaller or mid-size cities. As we said in Global Demographics, 19 February 2021, medium-sized cities are likely to grow more quickly as they benefit from the upsides that urbanisation brings, without the same level of drawbacks i

236、n terms of congestion, pollution and living costs. UN city-by-city projections show that the fastest growth rate is likely to be in cities with 3-5m people. This trend may be more evident in the developed world, where the focus on quality of life means that the high cost of living in the likes of Ne

237、w York, London and Paris, coupled with the boom in home-working means that medium-sized cities are the relative winners in the coming years. Competing for people But which cities will win? Given that workers are much more geographically mobile; we could see greater competition to attract people. The

238、 pandemic has led to greater value being placed on green space, local amenities and pollution, and this may be unlikely to change in the coming years. Cities will have to re-think about where to invest in the coming years. Looking at the worlds top cities from a range of different liveability survey

239、s, there are a few constants notably in Australia and Canada where city inhabitants enjoy a lot of access to open space, particularly on the coast, have high quality facilities and low levels of congestion and pollution. That means that some of this investment may be more traditional infrastructure

240、improving public transport offerings to discourage car usage (which causes both congestion and pollution which are unpopular) or building wider pavements or cycle lanes to allow more human-powered means of transport. And this wont just be cities doing this. We could see smaller towns and cities acro

241、ss the (mainly developed) world invest in faster internet speeds, more homes, parks and other green spaces or to improve the amenities available to make them more attractive places to live. This sort of softer urban investment may be underappreciated historically, but looks set to play a big role go

242、ing forwards. Additionally, whilst financing has been a problem historically, some urban areas may see opportunities to invest now being able to be funded by the green bond market, which could help to provide low borrowing costs and to spread the costs of these projects over their lifespan, rather t

243、han needing to pay for them up front. This sort of healthy competition between cities and regions may act as an accelerant for a rapid improvement in urban living conditions in a post-pandemic world and one which may mean much more investment in a wide range of projects. 1 Why People Live Where They

244、 Do, City Lab, 9 November 2015 27 Multi-Asset Emerging Markets June 2021 Funding cities with green, social and sustainability bonds ICMA Green and Social Bond Principles not just carbon Eligible green projects Eligible social projects Renewable energy Affordable basic infrastructure Energy efficienc

245、y Access to essential services Pollution prevention and control Affordable housing Environmentally sustainable management of living natural resources and land use Employment generation including through the potential effect of SME financing and microfinance Terrestrial and aquatic biodiversity conse

246、rvation Food security Clean transportation Socioeconomic advancement and empowerment Sustainable water and wastewater management Climate change adaptation Eco-efficient and/or circular economy adapted products, production technologies and processes Green buildings Source: ICMA. Project types particu

247、larly suited to cities highlighted in red. The global green bond market stands at USD1046bn outstanding as of 2 June, with EUR accounting for 47%, USD 29% and RMB 11%. Social and sustainability bonds add a further USD637bn. Growth is strong, with year to date supply more than double the same period

248、last year. Green, social and sustainability bonds are use of proceeds bonds. This means they fund specific, designated projects. Green bonds fund environmental projects, social bonds fund social projects, and sustainability bonds fund a mix of both. But they are not secured against those projects, a

249、nd the cash flows to repay them come from the general revenue of the issuer. Green bonds are governed by the ICMA Green Bond Principles, and social bonds by the ICMA Social Bond Principles. These recommend how projects are evaluated and selected, and how bond proceeds are managed and reported. They

250、also list eligible project types (table above). Three green bond project types stand out as being particularly suited to funding cities: clean transportation, climate change adaptation and green buildings. Green bonds often fund multiple project types, but we identify bonds totalling at least USD369

251、bn which have clean transportation as at least one of their themes, and USD141bn for climate change adaptation and USD47bn for green buildings. And on the social bond side, affordable housing is well suited to funding cities. Issuers could be sovereigns, regional authorities, or even corporates espe

252、cially in real estate. More generally, renewable energy and sustainable water and wastewater management are suited to funding infrastructure on the green bond side, as is affordable basic infrastructure on the social bond side: we identify bonds totalling at least USD544bn, USD217bn and USD47bn whic

253、h have these as at least one of their themes. Of course, these projects could be funded with ordinary bonds. Green, social and sustainability bonds offer two advantages: they bring visibility to the underlying projects, and they typically provide cheaper funding the “greenium” or spread at which gre

254、en bonds trade to non-green bonds is on average slightly negative (Green Bond Insights: The new climate, 23 March 2021) due to the demand from ESG investors. Not all green bonds are equally impactful from a climate point of view however. At the end of 2018, of bonds with a Moodys Green Bond Assessme

255、nt, 52% funded green buildings and energy efficiency projects but accounted for only 6.8% of carbon emissions reduction achieved. As for clean transportation, this is more impactful in countries with a clean electricity grid. For example, Socit du Grand Paris recently issued a EUR3bn 10-year green b

256、ond to finance the Grand Paris Express, a new automated electric metro network for the Greater Paris area, and to modernise the existing network. For countries with higher carbon electricity, renewable energy and energy efficiency would be more impactful Dominic Kini Credit and Green Bond Strategist

257、 HSBC Bank plc +44 20 7991 5599 Clean transportation, climate change adaptation and green buildings stand out Multi-Asset Emerging Markets June 2021 28 Infrastructure plans to boost commodity demand An increase in infrastructure spending boosts demand for commodities, which, in turn, supports price

258、s. Commodity-intensive infrastructure projects from governments include housing, highways, transit, energy, and more recently climate-related. Metals tend to be the most heavily impacted, steel being is used intensively in the building infrastructure, not least to reinforce concrete, as well as many

259、 base metals, including copper. To support the economic recovery from the COVID-19 crisis, both the European Union (EU) and US have announced significant plans to build infrastructure. These building programmes are much larger than those announced in those regions after the 2008/09 Global Financial

260、Crisis (GFC). Indeed, they are of similar scale, as a share of GDP, to the infrastructure spend that mainland China announced after the GFC (Chart below). The EU has a EUR1.8trn fiscal support package, including the Next Generation recovery fund, with a significant emphasis on infrastructure investm

261、ent. There is a strong emphasis on green Commodities and the Wests infrastructure plans Demand for commodities is set to be supported by Western plans to boost infrastructure investment but the multi-year rollout, focus on repairs and the use of recycled materials, should temper the impact on commod

262、ity markets Climate-policy-related electrification is likely to be a significant support for specific materials, such as copper, lithium and cobalt Paul Bloxham Chief Economist, Australia, New Zealand & Global Commodities HSBC Bank Australia Limited .au +61 2 9255 2635 Jamie Culling Economist, Austr

263、alia, NZ & Global Commodities HSBC Bank Australia Limited .au +61 2 9006 5042 Western infrastructure plans support future metals demand. The major economies have large infrastructure plans, but they are mostly multi-year (as per latest available data) Source: The Biden plan to build a modern, sustai

264、nable infrastructure and an equitable clean energy future, Error! Hyperlink reference not valid.; https:/ieefa.org/european-commissions-e1-85-trillion-pandemic-recovery-plan-stresses-green-infrastructure/ . 02468101214% US GDP% world GDP% China GDP% world GDP% EU GDP% world GDPUSChinaEU%I

265、nfrastructure investmentGFCCOVID 29 Multi-Asset Emerging Markets June 2021 infrastructure, to help put Europe on a path towards net-zero emissions by 2050. The stimulus package calls for a “renovation wave” of buildings and infrastructure, supporting the European Green Deal. The stimulus also includ

266、es investments in circular economy efforts, renewable energy projects, clean hydrogen infrastructure, green transport networks, and an enhanced Just Transition Fund for workers. The US administration has proposed plans for more US investment in infrastructure, with a particular focus on green techno

267、logy. President Biden introduced a USD2trn plan to overhaul the USs infrastructure. Among the vast list of initiatives are funding for transportation, including to fix highways, rebuild bridges, upgrade ports, airports and transit systems, renew the electric grid, and provide high-speed broadband; a

268、s well as, revitalising the manufacturing sector. This translates into 20,000 miles of rebuilt roads, repairs to the 10 most economically important bridges in the country, the elimination of lead pipes from the nations water supplies and a long list of other projects. Again, green infrastructure is

269、at the heart of this plan, with further funding “to achieve technology breakthroughs that address the climate crisis. Clearly, this underpins demand for metals, and other inputs into building. Support from the EU and US government stimulus has already been flowing to copper-intensive sectors like co

270、nstruction and infrastructure. Investments in “new infrastructure electric vehicles (EVs), EV charging stations and 5G rollout will also play a role (see: Commodities Unearthed: Copper Just like the good old days?, 29 November 2020). but developed market building is different to EM However, not all

271、infrastructure is equal. At least, when it comes to supporting commodities demand. It is typically greenfield projects, such as those in emerging economies, that draw the most on raw commodities. In contrast to emerging market infrastructure projects, for developed economies, much of the demand for

272、metals used in construction is met by recycled materials (Chart below). As old infrastructure, buildings, and even motor vehicles are retired, the materials are re-used in new projects. In addition, much of the needed work on infrastructure in the US and EU is repairs, for example to bridges and roa

273、ds, rather than new developments. The key exception to this is likely to be increased electrification, particularly of motor vehicles, which requires new electrical networks. We see the battery-related commodities, including copper, as likely to benefit (see: Global Commodities: A bumpy and uneven r

274、ecovery, 16 September 2020). with the EU and US notably boosting infrastructure post-COVID-19 Mainland China uses substantially less recycled steel in steelmaking Source: Bureau of International Recycling; worldsteel; CAMU; EUROFER; USGS/ISRI; HSBC But, Western infrastructure often relies heavily on

275、 recycled materials 020406080020406080ChinaUSEUSteel scrap used in steel production (ratio steel scrap / crude steel, %)200182019 Multi-Asset Emerging Markets June 2021 30 Infrastructure in emerging markets, on the other hand, is mostly built using new materials. For example, mainland Chi

276、na relies on about 80% imports for iron ore, and only around 20% of recycled steel is used in steelmaking. Emerging markets often do not have the necessary infrastructure in place, either, to be able to process and reuse old material at a substantial scale. The use of recycled material in infrastruc

277、ture has also been constrained by mainland Chinas own policies. Mainland Chinas ban on solid waste imports in July 2019 curtailed ability to use scrap from elsewhere to meet needs. Although mainland China is looking to lift the contribution of recycled materials in its infrastructure, this will take

278、 time to flow through. Western infrastructure building is also likely to play out over a relatively-long horizon. In the US, investment in the American Jobs Plan is spread over 8 years. In the EU, the horizon is 7 years. Both are substantially longer than mainland Chinas 5-year plans, and much more

279、drawn out than the delivery of mainland Chinas massive post-GFC infrastructure build out. All in all, we expect that the Western infrastructure plans will not be as supportive for commodity prices as the equivalent infrastructure plans in mainland China earlier in the century. Climate policy to driv

280、e particular commodities However, climate policy is a notable area where the current Western infrastructure plans are more likely to drive sustained demand for particular commodities and thus sustained higher prices. Reflecting the sheer scale of the electrification transition that is underway. This

281、 source of secular demand is likely to support specific commodity prices, such as copper, lithium and cobalt. Copper is expected to be a key commodity supported by climate-related policy. Electric vehicles and moves to solar and wind for electricity all involve infrastructure connect and transport t

282、he electricity. Each electric vehicle requires 2-5 times as much conductive material (for example, copper) as internal combustion engines. Solar panels and wind turbines are spread over large geographic areas, while traditional electricity plants are clustered together in a tight place, meaning more

283、 copper is needed to connect renewable grids. Cobalt and lithium will also benefit from the demand for large new increments of battery materials. These markets have historically been driven by battery demand (largely for consumer electronics). The growing adoption of EVs and need for EV batteries wi

284、th higher energy densities should see demand continue to increase. Two key factors are playing a large role for these commodities. First, the speed of EV adoption. Second, the shift in EV battery chemistries. For example, recent renewed enthusiasm for cobalt-free lithium-ion-phosphate (such as by Te

285、sla and in mainland China). Alongside secular demand support, supply disruptions can also support commodities. Chile and Peru have been at the heart of this recently, given significant contract negotiations due in 2021. Chile the worlds biggest copper producer has recently changed governments, fuell

286、ing concerns around the supply outlook due to possible tighter regulation and higher taxes. Union members in BHPs Escondida and Spence mines have also opted to strike, sparking more immediate supply disruption concerns. In Peru, presidential candidate Pedro Castillo has also commented on raising tax

287、es and royalties on Perus key mining sector, and renegotiating the tax contracts of large companies, if elected. and will be spread over a longer horizon, compared to Eastern infrastructure Climate-related infrastructure is an exception in the West which should see secular demand for specific metals

288、, such as copper 31 Multi-Asset Emerging Markets June 2021 Part two: How to play the story in EM Part two seeks to identify a range of different EM beneficiaries. These are organised into three groups (i) Asian plays on Chinese infrastructure spending (ii) non-Asian metal and mining plays and (iii)

289、domestic-facing plays in commodity markets. Multi-Asset Emerging Markets June 2021 32 Asian infrastructure plays One part of EM in which infrastructure spending has been significant and is likely to remain so, is mainland China. This section looks at a range of Chinese infrastructure plays - we disc

290、uss metals and mining, industrials, energy and ESG. We also consider some non-Chinese Asian names. 33 Multi-Asset Emerging Markets June 2021 Banning “malicious speculation”: The Chinese government has pledged to crack down on “malicious speculation” amid rising concerns over inflation. It has become

291、 the governments priority to closely follow the trend of commodity prices and to ban any kind of illegal activity that leads to spikes in commodity prices, particularly in coal, steel and iron ore. This could include abnormal trading and malicious speculation. We expect the heightened oversight may

292、help reduce some of the speculative interest in the futures market. But, we believe it will be difficult to control prices, given that many commodity markets are either in deficit or tightly balanced (Metals Quarterly Q2 2021: Digging Deeper into deficits, 27 April, 2021). We believe the government

293、is unlikely to restrain commodity demand, as sustaining the recovery in economic growth post COVID-19 is also a top priority. It is also unlikely that the government will allow a significant expansion in supply, given the previous oversupply dilemma, which has taken years to rebalance. As a result,

294、we believe cash flows of the Chinese metal and mining companies are likely to continue to benefit from rising demand and tight supply, which is likely to keep markets tight. Minimizing the environmental impact and emissions output are key objectives, but not only for the next five years: Globally, t

295、here is a renewed focus on reducing carbon emissions. Mainland China, which accounts for roughly 28% of global emissions, has established a new set of targets in its 14th Five-Year Plan (FYP), to reduce carbon intensity by 18% and energy intensity by 13.5% from 2020 levels. At the same time the FYP

296、targets increasing the share of non-fossil sources in the energy mix to c20% over 2021-2025. The focus on environment and emissions is likely to have long-term implications on the commodities market. We believe emission controls, including a switch to renewable sources of power, will benefit steel a

297、nd copper, and adversely impact coal demand, in the long run. While we recognise coal is out of favor in a climate context, markets are tight, and some investment is required. In 2Q20 coal prices spiked counter-seasonally in mainland China. This was due to the combination of shortfalls in domestic o

298、utput, a surge in power demand, shortfall of China metals and mining and domestic infrastructure spend The Government is cracking down on “malicious speculation”, but commodity markets are either in deficit or tightly balanced Renewed interest in controlling emissions and achieving carbon neutrality

299、 is likely to reshape the outlook for materials longer term Metal prices to benefit from stimulus measures in mainland China and the US, increasing investment and positive demand outlook Thomas C. Hilboldt*, CFA Head of Resources & Energy Research, Asia Pacific The Hongkong and Shanghai Banking Corp

300、oration Limited .hk +852 2822 2922 Howard Lau*, CFA Analyst, China Basic Materials The Hongkong and Shanghai Banking Corporation Limited .hk +852 2996 6625 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emergi

301、ng Markets June 2021 34 hydro output, and a ban on Australian imports (see: March data: Strong power demand sustained). Globally, coal is used primarily in two applications: power generation (65%) and industrial applications (30%). The large share in global powergen is mainly because of coals role a

302、s a base-load fuel in Chinese power generation. Mainland China still relies on coal for over 55% of primary energy, and with power shortages looming in the summer, coal prices spiked to near RMB1000/t. Coal is one of the markets where the government seeks to stamp out speculation, having just banned

303、 banks from marketing commodity based products, but policy and investment plans within the 14th FYP are out of sync with longer term objectives, in our view. Copper remains our most preferred base metal: Copper prices have surged c30% so far in 2021. The rally is being driven by the strong recovery

304、in demand as a result of the global economic recovery; supply disruptions; expectations for increasing inflation; record low exchange inventory levels; and record net long speculative positioning. We expect the physical copper market to be in deficit in 2021e and 2022e before returning to a surplus

305、(see China Copper: Surging copper; rising profits, 3 May 2021). We still expect mine supply to rise over the next several years as new projects start. However, given better demand, we expect the market to remain tight in the near term and prices to remain strong. Favorable policy tailwind for steel

306、in the medium term: The steel industry has entered a new upcycle with improved fundamentals and a favorable policy tailwind, in our view (see our Greater China Steel: The upcycle continues, 12 May 2021). We expect more supply side control policies to be announced in order to reduce total crude steel

307、 output (+16% YTD) and align with the Ministry of Industry and Information Technologys (MIIT) intention of lowering steel production, hence lowering emissions. We believe any additional supply control measures would further improve industry fundamentals, and hence, margin expansion to continue. In a

308、ddition, recent removal of the export tax rebate (net exports are c3% of the market) and the announcement of new capacity swap regulation is in line with expectations, which should help to prepare further supply-side control, in our view. Best ideas MMG (1208 HK; CMP: HKD4.30, Buy; TP: HKD7.50) MMG

309、is the key beneficiary of the higher copper price driven by the robust new Infrastructure demand in mainland China as well as the demand recovery from the rest of the world. The strong recovery in commodity prices since 2H20, particularly the copper price rally, helped the company to post its first

310、interim net profit after its losses since 2H18. We estimate that for every 1% change in the price of copper, earnings for MMG will change by 3.0%. Angang Steel-H (347 HK; CMP: HKD4.91, Buy; TP: HKD8.00) Angang Steel-H benefits from the improved industry fundamentals amid favourable supply and demand

311、 dynamics. The potential policies on emission control should further improve the bargaining power of leading players, like Angang-H. We like Angang-H over other Chinese steel companies under our coverage due to its geographic location and product offering. Angang has more exposure to flat products t

312、hat are less sensitive to a potential decline in property construction. 35 Multi-Asset Emerging Markets June 2021 Sector overview The China industrials sector has had a good run since 2020, given the swift rebound in production activity with fast pandemic control. Currently, we believe the construct

313、ion machinery sector is entering into late-cycle and, late-cycle machinery such as concrete and crane machines will likely benefit. In addition, we believe with the National Standard VI starting to take effect in July 2021, heavy duty truck y-o-y growth will gradually normalise into 2H21. On the oth

314、er hand, demand for automation upgrades should continue, given the secular drivers of a decreasing labour force and increasing labour costs. We believe the raw material price hike and key component shortage (automation players reporting shipment delay on chip-heavy components) will make industry lea

315、ders come out stronger given they have better bargaining power. Late-cycle construction machinery to benefit more Excavators and wheel loaders (which are usually considered early-cycle machinery), sales volume grew 3% and 9% y-o-y in April 2021 respectively (-41% and -19% m-o-m respectively due to s

316、easonality). Excavator domestic sales declined by 5% y-o-y in April, while exports grew 166%. We think the industry will see a 17% y-o-y decline in the coming months based on our unchanged FY21 sector growth forecast of 7% y-o-y while export sales will remain strong. For wheel loaders, due to strong

317、 mining production volumes (iron ore up 7% y-o-y and non-ferrous metal up 13% y-o-y), we think it will record a smaller decline of 3% y-o-y in May-Dec 2021. Our FY21e sales pecking order is concrete machines cranes loaders excavators. Heavy duty truck start y-o-y growth should normalise in 2H21e Acc

318、ording to (5 May 2021), domestic HDT (heavy-duty truck) sales volume in April saw a y-o-y increase of 4% (vs 98% y-o-y in March) and a m-o-m decline of 14% (Exhibit 1). We think the industry is likely to see 58% y-o-y decline in the coming months, as replacement demand of c0.8m units generated by t

319、he implementation of National Emission Standard VI after July 2021 was almost fulfilled. Automation upgrade to continue given increasing labour cost Mainland Chinas industrial robot production unit recorded 108% y-o-y growth in March 2021, marking the 13th consecutive month of growth since March 202

320、0. Mainland Chinas metal cutting machine tools imported from Japan also grew 231% y-o-y in February (24% m-o-m). With mainland Chinas decreasing labour force (share of population aged 15 to 59-year-old China industrials Upcycle has had a good run since 2020, we think late-cycle construction machiner

321、y (concrete and cranes) is now better positioned Heavy Duty Truck y-o-y growth should gradually normalise in 2H21e after National Standard VI; automation upgrade is a secular trend Maintain Buy on Zoomlion-H, Weichai Power and Airtac; as they are late-cycle plays, non-road engine leaders and secular

322、 beneficiaries Helen Fang* Head of Industrials Research, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited .hk +852 2996 6942 Kenneth Chin* Associate The Hongkong and Shanghai Banking Corporation Limited .hk +852 2822 4521 Sunny SUN* Associate Guangzhou * Employed by a non-US affili

323、ate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2021 36 declined by 6.8ppt over the past 10 years) and increasing labour costs, we think automation upgrade is a secular growth trend, which should benefit both robot ma

324、nufacturers and key automation component makers. 37 Multi-Asset Emerging Markets June 2021 Zoomlion Heavy Industry Zoomlion Heavy Industry (1157 HK/000157 CH); CMP HKD9.08/RMB10.92; Buy/Hold; TP HKD15.20/RMB12.90) 83% of Zoomlions FY20 revenue was from late-cycle machinery such as concrete machinery

325、 and cranes (FY20 revenue contributions of 29% and 54%, respectively), which we think is better-positioned currently as the cycle progresses. Zoomlions concrete machine and cranes saw steady market share gains in 1Q21. Large-scale crawler and all-terrain crane sales ranked #1 in the sector, while to

326、wer cranes saw 1Q21 sales up 150% y-o-y as small firms exited the market due to lack of raw materials. Concrete mixer trucks saw 1Q21 sales up 147% y-o-y as Zoomlions lightweight mixer trucks met overload prevention requirements. Going forward, Zoomlion expects to achieve full production in 2Q21 wit

327、h strong order flow, especially for large-scale products. We forecast FY21 sales up 31% y-o-y to cRMB86bn, implying April-December revenue expansion at 19% y-o-y. Weichai Power Weichai Power (2338 HK / 000338 CH); CMP HKD17.98/RMB18.00; Buy/Buy; TP HKD22.70/RMB19.20) Weichai Power was founded in 200

328、2 by Weichai Holding Group. Originally focusing on diesel engine manufacturing, it has expanded its business areas into gearbox, heavy-duty truck (HDT), truck axle, forklift, hydraulics, smart logistics, hydraulic fuel cells through internal R&D and acquisitions over the years. In 1Q21, Weichai sold

329、 385,000 engines (up 82% y-o-y). The HDT engine instalment base reached 35% in mainland China vs. FY20s 29%. Kions forklift business (69% contribution to Kions revenue in FY20) saw new orders up 29% y-o-y in 1Q21 and SCS also recorded new order growth of 21% y-o-y. Kion is guiding for 10% to 17% rev

330、enue growth and 32% to 46% adjusted EBIT growth for 2021. We like Weichai Power in the sector as its leading position is robust in HDT and the engine market, benefitting from its full supply chain coverage and tech advantages. Weichai is diversifying HDT cyclical risks by penetration in construction

331、 machinery engines and smart logistics. Airtac Airtac (1590 TT; CMP TWD992.00; Buy; TP TWD1,470.00) Airtacs is the second largest pneumatic component company in mainland China with 17% market share just behind SMC at 33% as of 2019 (6273 JP, not rated). Airtacs April 2021 RMB sales grew 21% y-o-y (2

332、.3% m-o-m), to RMB560m, hitting another historical high. This is also the 14th consecutive month of double digit y-o-y growth since March 2020. The company mentioned that demand for pneumatic products is growing steadily and its market share is increasing. We see the current upcycle continuing until

333、 end-2021 as multiple downstream factors including 5G, new infrastructure, EV and electronics drive demand. In addition, Airtacs new linear guide products has entered mass production and reached 80- 90% utilisation in March 2021 with c.40% gross margin. We estimate 225% y-o-y growth in Airtacs linea

334、r guide revenue to RMB650m in 2021 (11% of total revenue, exhibit 7). We forecast a 2021-23 CAGR of 121% for Airtacs linear guide business. Overall, we forecast 37% total revenue and 36% net profit y-o-y growth for 2021. Helen Fang* Head of Industrials Research, Asia Pacific The Hongkong and Shangha

335、i Banking Corporation Limited .hk +852 2996 6942 Kenneth Chin* Associate The Hongkong and Shanghai Banking Corporation Limited .hk +852 2822 4521 Sunny SUN* Associate Guangzhou * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulatio

336、ns Helen Fang* Head of Industrials Research, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited .hk +852 2996 6942 Kenneth Chin* Associate The Hongkong and Shanghai Banking Corporation Limited .hk +852 2822 4521 Sunny SUN* Associate Guangzhou * Employed by a non-US affiliate of HSBC

337、Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Helen Fang* Head of Industrials Research, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited .hk +852 2996 6942 Kenneth Chin* Associate The Hongkong and Shanghai Banking Corporation Limited .hk +852

338、2822 4521 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2021 38 Mainland Chinas Energy transition The 14th Five Year Plan (FYP) has been released. It is focussed on the Energy Transition

339、; but not entirely. Substantial infrastructure investments will be made in both traditional and the transitional forms of energy infrastructure. But, traditional energy production and delivery is required to retain energy security over the next decade, which remains a top priority. The cost of oil a

340、nd gas imports fell about 25% y-o-y in 2020 to USD210bn, but is likely to rebound almost just as sharply in 2021e due to both higher volume and prices. Given the coal-fired power capacity and generation outlook, some investment in new coal production will be required in our view. The outlook is for

341、continued growth in coal fired power capacity and generation, indicating that coal will still be a baseload fuel in the 14th FYP and likely the 15th FYP. The transition to renewable + storage baseload power is taking longer than expected in mainland China, mainly because the policy makers are concer

342、ned that renewables cannot yet meet baseload demand at the grid while storage is insufficient and yet expensive. At present this is clearly true as coal prices have surged to over RMB900/t, counter seasonally and 50% above the greenzone price range. Natural gas. Natural gas remains a key component o

343、f mainland Chinas energy plan as a replacement against more polluting fuel (e.g. coal, heavy duty oil) and policies suggest demand will double from 330bcm in 2020 to 600bcm by 2030. This will require infrastructure up and down the natural gas value chain: domestic production, import receiving (piped

344、 (PNG) and liquified (LNG), storage and trunk, branch and city pipeline distribution. We see some of this spending in the China majors capex, but some will be done through unlisted PipeChina and other downstream operators. Ongoing investment in gas of this magnitude raises some concerns after IEA is

345、sued its latest outlook for the road to net zero emissions (see: is gas still a transition fuel?, 25 May 2021) . Renewables + storage. Expectations for wind and solar installations continue to rise (see: Voice of the market is heard 19 April ). But because of their intermittent generation, mainland

346、China requires ongoing significant investment in energy sources and electricity storage. A draft plan from the National Energy Agency identifies a plan to double electricity storage capacity to more than 65MW. This includes pumped hydropower. China energy a traditional infrastructure exposure Capex

347、by Chinese energy companies is again at a very high level, over USD100bn per annum This includes infrastructure to produce, receive, store and deliver traditional and transitional energy forms, but is still largely traditional The weight of investment will shift to transitional over the decade but t

348、he front-end is still very carbon heavy, in our view Thomas C. Hilboldt*, CFA Head of Resources & Energy Research, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited .hk +852 2822 2922 Evan Li* Head, Asia Utilities & Conglomerates Research The Hongkong and Shanghai Banking Corporatio

349、n Limited .hk +852 2996 6619 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations 39 Multi-Asset Emerging Markets June 2021 Hydrogen-related investment corridors under construction. Through existing energy providers such as Sin

350、opec, mainland China is developing an aggressive plan to deploy hydrogen infrastructure, similar to recent announcements from northern Europe. Daimler (DAI GR; CMP BRL27.23; Buy), Shell (RDSA LN; CMP EUR15.68; Buy), Siemens (SIE GR; CMP EUR132.82; Buy), and Engie (ENGI FP; CMP EUR12.15; Hold) are te

351、aming up to build a hydrogen corridor connecting three green hydrogen producing hubs, the Port of Rotterdam, Cologne and Hamburg. CATL will also provide batteries in a contract to 2030 (see: Daimler AG (DAI GR) : Buy: Update post Q121 and Truck CMD). Mainland China intends similar corridors connecti

352、ng Beijing and Shanghai and in Shandong. More than 10 provinces have included hydrogen as a key fuel in their 14th FYPs. Capex spending outlook remains emission “heavy” at over 95%. We aggregated capital spending across the major public companies in five major sectors: Oil, Refining and Chemicals, C

353、oal, IPP, and Towngas. While our Utilities team estimates that the traditional IPP capital spending is up to 70% toward renewables, this is a small sliver in the below spending stack. CNOOC identifies that it will allocate 5% of its capital spending to new energy. But a large part of the below spend

354、ing will be directed towards investments which are carbon intensive. We expect that over 95% of the capex over 2021e-2023e represented below is going into carbon and/or emission intensive projects. Mainland China: capital spending by major sector groups: Oil, Chemical, Coal, IPP, Towngas (USD bn) So

355、urce: Company reports, Bloomberg Consensus estimates Oil Majors CNOOC LTD-H; PETROCHINA CO LTD-H; CHINA PETROLEUM & CHEMICAL-H Chem Majors: HENGLI PETROCHEMICAL CO LTD-A; HENGYI PETROCHEMICAL CO-A; RONGSHENG PETROCHEMICAL CO-A Coal Majors: CHINA COAL ENERGY CO-H; CHINA SHENHUA ENERGY CO-H; YANZHOU C

356、OAL MINING CO-H IPP Majors: CHINA RESOURCES POWER HOLDING-H; DATANG INTL POWER GEN CO-H; HUADIAN POWER INTL CORP-H; HUANENG POWER INTL INC-H Citygas Majors: CHINA GAS HOLDINGS LTD: CHINA RESOURCES GAS GROUP LTD: ENN ENERGY HOLDINGS LTD: HONG KONG & CHINA GAS: TOWNGAS CHINA CO LTD:KUNLUN ENERGY CO LT

357、D 3342537935200720092001720192021e2023eCHINA OIL MAJORSCHINA CHEM MAJORSCHINA COAL MAJORSCHINA IPP MAJORSTOWNGAS MAJORSTOTAL CAPEX USD bn Multi-Asset Emerging Markets June 2021 40 Best ideas CNOOC (883 HK; CMP: HKD8.71, Buy; TP:

358、 HKD11.90) CNOOC is a key beneficiary of higher oil and gas prices, but also has a role in the new energy build out, given its commitment to invest a minimum of 5% of total annual capex into new energy. This would include infrastructure for offshore wind power and hydrogen-related infrastructure, se

359、parate from its ongoing spend for upstream oil and gas exploration and development. China Gas Holdings (384 HK; CMP: HKD28.65, Buy; TP: HKD35.00) We expect gas consumption in mainland China to rebound in 2021 as the economy recovers post COVID-19 especially in commercial and industrial (C&I) segment

360、s. China Gas Holdings remains our preferred gas play among our covered gas utilities for its growth and opportunities in M&A, which is properly incentivised by share options (issued in April 2020) and aggressive targets in advance of the companys 20th anniversary in 2022. Piped gas distribution rema

361、ins its key business segment, contributing to 30% of operating profit in 1H-FYMar21, followed by gas connections (24%), valued-added services (16%) and LPG (1%). Management has guided its piped gas volume to grow +15% YoY in FYMar21 supported by demand during winter, while acquisition is another dri

362、ver to volume, with 20 projects already under negotiation in the pipeline according to a public disclosure in Apr 2021. Recent strategic cooperation agreements signed with CNOOC (883 HK; CMP HKD8.71; Buy) and China Unicom (762 HK; CMP HKD4.17; Hold) have enabled China Gas to further explore new oppo

363、rtunities in value-added businesses, integrated energy service, hydrogen fuelling stations, and digitalised service, which could bring potential upside to earnings with a better cash flow model. Thomas C. Hilboldt*, CFA Head of Resources & Energy Research, Asia Pacific The Hongkong and Shanghai Bank

364、ing Corporation Limited .hk +852 2822 2922 Evan Li* Head, Asia Utilities & Conglomerates Research The Hongkong and Shanghai Banking Corporation Limited .hk +852 2996 6619 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations 41

365、Multi-Asset Emerging Markets June 2021 Sector overview A key driver for ESG in mainland China is the aim of achieving carbon neutrality by 2060. Here we highlight two ESG infrastructure plays; Xinyi Solar which is a leading solar glass manufacturer and Nari Technology which is the largest grid autom

366、ation equipment supplier in mainland China. Xinyi Solar (968 HK; Buy; CMP HKD14.16; TP HKD15.00) Xinyi Solar is a leading solar glass manufacturer with a market share of 35% in 2020. We continue to like Xinyi Solar because of its cost leadership and ability to deliver sustainable growth on capacity,

367、 volume and earnings, despite the recent ASP correction. We forecast 2021-23 net profit growth of 13%/3%/25% y-o-y, respectively, mainly driven by capacity expansion and continued development for its solar farm business. The stock price has declined 35% YTD (vs HSI +3%), which we attribute to the st

368、eep fall in solar glass prices (solar glass ASPs down 52% YTD), as well as uncertainty on tariffs/subsidies for solar farms based on consultation papers from National Development and Reform Commission (NDRC) that have resulted in the sector becoming much more volatile. On 19 April 2021, the National

369、 Energy Administration (NEA) released a second consultation paper on wind and solar power installation. This version is considerably different from the previous one after the collection of feedback from the industry. The implementation of the final policy is still pending. For details, see Voice of

370、the market is heard, 19 April 2021. We are positive on mainland Chinas ambitious climate goals, which should support renewable energy installations over the medium to long term. Nari Technology (600406 CH; Buy; CMP RMB30.30; TP RMB35.00) Nari Technology is the largest grid automation equipment suppl

371、ier in mainland China, and has 56% revenue exposure to grid automation in 2018. We believe Nari is well positioned to benefit from the rising penetration of grid automation in mainland China. Mainland Chinas industrial strength has been built on many pillars, and one of the most important is the cou

372、ntrys huge power grid. To meet the ever-increasing demand for electricity, mainland China has been expanding its ultra-high voltage (UHV) network which is used to carry power over long distances, making it a perfect match for the countrys challenging geography. Mainland China has the most UHV lines

373、in the world and this network is creating a bridge between the resources-rich western provinces and the power-hungry eastern regions. The new UHV grid is also helping the country make the transition to renewable generation as it attempts to reduce its reliance on coal and cut levels of pollution. ES

374、G plays on Chinese infrastructure spend 2060 carbon neutrality goal a key driver A solar play and an electrification beneficiary Evan Li* Head, Asia Utilities & Conglomerates Research The Hongkong and Shanghai Banking Corporation Limited .hk +852 2996 6619 Hebe Zhou*, CFA Analyst, Utilities & Altern

375、ative Energy The Hongkong and Shanghai Banking Corporation Limited .hk +852 2914 9973 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Corey Chan* (Reg no: S01) Head, A-share Infrastructure & Renewables Research

376、HSBC Qianhai Securities Limited +86 21 6081 3801 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2021 42 Sector overview Commodity prices have risen significantly, rapidly, and the pick-u

377、p has been fairly broad-based across materials supporting an earnings recovery for the sector. The Bloomberg commodity index is up almost 20% since the start of the year and around 45% on a y-o-y basis. This fastest rise in commodity prices in at least 30 years. For metals prices, both demand and su

378、pply factors are playing a role, with a number of key metals prices rising to decade-highs, including iron ore and copper. Demand for iron ore has been supported by a strong rise in Chinese production of steel, while adverse weather and other issues have constrained supply. Copper prices breached th

379、e USD10,000/t mark and are near multi-decade highs. The rally has been driven by a strong recovery in demand, led by mainland China, supply disruptions, expectations for increasing global inflation, record low levels of exchange inventories, and record net long speculative positioning. That has also

380、 been supported by investment in electrification as emission reduction strategies are further bolstered by policymakers. Going forward, metals prices are expected to continue to benefit from potential Chinese and US stimulus, an improving global economy, uptick in ex-mainland China growth and contin

381、ued supply risk. Copper markets remain firm given the positive long-term demand outlook due to the substantial increase in coppers use for both infrastructure and products such as EVs. This is supportive of miners and processors. Three themes are likely to continue to drive commodity price reflation

382、, but are partially offset by overhangs from ESG and sanctions, and in some cases, more slowly recovering margins: 1. Hydrocarbon demand is recovering with structurally different profiles, but supporting the operating profiles of coal, upstream oil & gas producers, and integrated oils. 2. Greener en

383、ergy means more gas requiring more upstream production, liquefaction capacity, and pipeline/end-use infrastructure gas should surpass oil demand by 2030-35e. Asia ex mainland China playing the global infrastructure story A global economic recovery and supply chain bottlenecks have seen commodity pri

384、ces near multi-decade highs Metals have been so far supported by strong demand in mainland China And could potentially rise if US infrastructure plans materialize Barak Hurvitz*, CFA Associate, Equity Strategy The Hongkong and Shanghai Banking Corporation Limited .hk +852 2996 6941 Herald van der Li

385、nde*, CFA Head of Equity Strategy, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited .hk +852 2996 6575 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations 43 Multi-Asset Emerging Markets June 2021 3. Electrif

386、ication copper markets remain firm on long-term demand outlook due to the substantial increase in use for both infrastructure and products such as EVs. This is supportive of miners and processors. Best ideas LG Chem (051910 KS; CMP KRW 825,000.00; Buy; TP KRW 1,060,000.00) We expect chemical margins

387、 to remain strong in 2Q21e as the supply-demand balances of key chemical products should stay tight given seasonal maintenance activity and increased re-stocking demand, alongside a recovering global economy. Three factors should drive petrochemical revenue growth from 2Q21e: 1) the commissioning of

388、 the new Yeosu #2 naphtha cracker; 2) PO capacity expansion; and 3) NB Latex capacity addition in mainland China. Management expects LG Energy Solution (LGES) 2Q sales volume to increase on strong EV battery demand. LGES also expects to benefit from rapid ESS battery sales growth in the US under Pre

389、sident Bidens 2035 carbon-free power goal. We also forecast cathode demand to show a strong 40% CAGR during the same period. Korean cathode makers currently boast of their leading technology in high-nickel cathodes and we expect continued advantage. Moreover, the rise in raw material costs especiall

390、y cobalt has made chemistry transition to high nickel more crucial. On this front, management expects LGES to deliver higher battery shipments on better EV battery demand, partly offset by a downward trend in ASP due to increased competition, in our view. Formosa Plastics (1301 TT; CMP TWD103.00; Bu

391、y; TP TWD 126.00) In Taiwan, we prefer downstream chemicals to upstream refiners. We expect some chemical products to benefit around vaccine optimism, such as Polyvinylchloride (PVC). Prices are expected to rise amid limited new supply and recovering demand from the construction and housing sectors.

392、 We believe better earnings in 2021e should be a positive catalyst for share price performance; earnings should be boosted by strength in PVC, Ethylene Vinyl Acetate (EVA), Polypropylene (PP) spreads, as well as equity investment income from FPC USA and Formosa Petrochemical (FPCC). Indeed, 1Q21 net

393、 profits came in significantly ahead of expectations. We attribute the significant earnings growth to: 1) a strong oil price rebound and 2) higher product margins on a tighter supply in both refining and petrochemical markets due to unexpected supply disruptions from operational issues in the region

394、 and Texas winter storms. We believe FPGs earnings should continue to see sequential growth going into 2Q21 as we think petrochemical spreads in general should improve on better supply/demand balance following the heavy maintenance season in Asia in 2Q21, while demand should continue to recover on t

395、he back of the continued roll-out of COVID-19 vaccines. Moreover, as long as Brent remains below USD70/t levels, FPC noted that the company should be able to pass the rising raw feedstock costs onto downstream clients without hurting margins. PTT (PTT TB; CMP THB41.50; Buy; TP THB 52.25) PTT is a go

396、od proxy for investing in Thailands eventual economic re-opening, which should help drive better overall local manufacturing and tourism-related economic activities, which are both supportive of the companys earnings. In the previous cyclical recovery during 2016-18, the company was able to generate

397、 consistent quarterly net income of THB20-30bn. We believe that with improving market conditions, the company can achieve this level of profitability and surpass the previous peak cycle annual earnings of THB135bn registered in 2018. We expect peak earnings to be over RHB155bn in 2023e. Thomas C. Hi

398、lboldt*, CFA Head of Resources & Energy Research, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited .hk +852 2822 2922 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Evelyn Yu* Analyst HSBC Securities (Ta

399、iwan) Corporation Limited .tw +886 2 6631 2867 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Thomas C. Hilboldt*, CFA Head of Resources & Energy Research, Asia Pacific The Hongkong and Shanghai Banking Corporation Limite

400、d .hk +852 2822 2922 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2021 44 Non-Asia metals and mining plays Global infrastructure spending gets resonance outside Asia primarily in the fo

401、rm of higher metal prices. This section looks at the metals and mining sectors in LatAm and EEMEA. 45 Multi-Asset Emerging Markets June 2021 Sector overview Commodity prices have moderated of late, following the Chinese governments comments of concern related to raw material inflation, vowing punish

402、ment for speculation or hoarding in the commodities markets. Nonetheless, since the beginning of the year, commodity prices have increased rapidly, with copper up 28%, aluminium up 18%, zinc up 9% and nickel up by 3% y-t-d. Among bulks, iron ore increased 20%, while regional steel prices have also i

403、ncreased significantly, with US HRC increasing 57%, Europe HRC up 44% and China HRC prices up 36%. Among precious metals, gold prices moved to record high in 2020 and flat y-t-d while rhodium, platinum and palladium are up 41%, 11% and 17% respectively. Commodity prices will continue to be impacted

404、by the supply disruptions caused on the back of border closures or rising number of COVID-19 cases, labour negotiations or emission control measures. Steel has been in news through the year as the mainland Chinese government intends to lower production and in turn reduce emissions. Contract negotiat

405、ions and elections in Peru Chile have increased concern over future supply issues. In PGMs, supply tightness continues due to flooding at Norilsk mines and Anglo Platinum plant failure. Overall, we believe that the metals markets will continue to remain in deficit through the year. On the demand sid

406、e, governments in India and Europe have increased their investment in infrastructure and mainland Chinas fiscal stimulus, although phased out over the year, will continue to support infrastructure and construction activity. In the US, President Bidens “Build Back Better” programme, with a focus on i

407、nfrastructure and de-carbonising the economy, should drive growth in the medium term. We believe that the climate policy agenda will reshape commodities markets in the coming years. Globally, there is a renewed focus on reducing carbon emissions and mainland? China, which accounts for roughly 28% of

408、 global emissions, has established a new set of targets to control emissions in its 14th five-year plan. Mainland China intends to reduce carbon intensity by 18% LatAm metals & mining and the global infrastructure thesis Supply restrictions are the norm in most metal markets due to flooding, emissio

409、n controls and COVID-19 related shutdowns Emission controls, we believe, will reshape the commodities market in the coming years Metal prices set to find support from the possibility of supply disruption and strong demand outlook Jonathan Brandt, CFA Analyst, GEMs ex-Asia Metals & Mining/Pulp & Pape

410、r HSBC Securities (USA) Inc. Mariano Szachtman* Analyst, GEMs ex-Asia Metals & Mining/Pulp & Paper HSBC Bank Argentina S.A. .ar * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2021 46 from

411、 2020 levels, reduce energy intensity by 13.5% from 2020 levels, increase the share of non-fossil sources in the energy mix to c20% over 2021-2025 (currently c15%) and increase forest coverage to c24% (from the current 23%). On the PGM front, renewed interest in green hydrogen should lead to demand

412、increases for PEM (Proton Exchange Membrane) electrolysers as PEM is better suited for renewable power sources. PEM electrolysers should become increasingly more cost competitive with economies of scale. Fuel Cell Electric Vehicles (FCEVs) that also use PEM technology require platinum as a catalyst

413、and will be an additional demand driver. For details, please see, Energy Transition: Hydrogen impact on PGMs, 15 February 2021. Furthermore, Copper would benefit from the increase in switching to renewable sources of power and electric vehicles. We believe that these emission control measures would

414、benefit Copper, PGMs and steel while having an adverse impact on coal prices, in the long run. Best ideas Grupo Mexico (GMEXICOB MM; CMP: MXN96.86, Buy; TP: MXN120.00) Grupo Mexico has significant exposure to copper and high quality of assets. We estimate that the copper market will continue to rema

415、in in deficit over the next two years while demand should continue to remain strong from mainland China and the global push for increased infrastructure pending. Also, a number of labour contract negotiations are pending in Chile (largest producer of copper and accounts for c28% of the global supply

416、) in 2021 which should tighten the market further. Furthermore, Grupo Mexico continues to trade at a significant discount to its NAV on the back of which we reiterate our Buy rating on the stock. Vale (Vale US; CMP: USD22.20, Buy; TP: USD25.00) Vale remains our preferred name in our Metals & Mining

417、universe, driven by strong commodity prices, improving corporate governance, increasing capital return to shareholders and attractive valuation. With high iron ore prices and low cash costs, we think Vale is likely to narrow the valuation gap with the likes of BHP (not covered) and Rio Tinto (not co

418、vered) as its dividend pay-out accelerates and ESG improvements continue. Gerdau (GGBR4 BZ; CMP: BRL34.12, Buy; TP: BRL42.25) Brazil apparent steel consumption continues to surprise on the upside, with YTD demand (through March) increasing 33% y-o-y, driven equally by flat and long steel. Civil cons

419、truction and auto demand have been the main drivers, which we expect to continue. We expect Brazils domestic steel consumption to increase 8.5% y-o-y and crude steel production to increase 7.2% y-o-y in 2021. We forecast that both production and consumption will increase at a CAGR of c4% during 2021

420、-25. We believe that Gerdau will benefit from: (1) real estate launches and opportunities in infrastructure in Brazil; (2) strong demand from the construction industry and infrastructure investment package in North America; (3) maintenance of good activity levels in the in South America markets of A

421、rgentina and Peru; and (4) inventory replenishment in the auto sector benefiting Special steel. Jonathan Brandt, CFA Analyst, GEMs ex-Asia Metals & Mining/Pulp & Paper HSBC Securities (USA) Inc. Mariano Szachtman* Analyst, GEMs ex-Asia Metals & Mining/Pulp & Paper HSBC Bank Argentina S.A. .ar * Emp

422、loyed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations 47 Multi-Asset Emerging Markets June 2021 Sector overview The Palladium and Rhodium market is driven largely by the autos demand which we expect to recover 13% in 2021. Over the me

423、dium term we expect the continued tightening emissions legislation from the China 6b regulations and reducing conformity factor from Euro 6 regulations to drive an increase in loadings. Growth in PGM supply remains subdued due to underinvestment in projects during the downturn in commodity prices. T

424、he hydrogen application of platinum and iridium (for PEM electrolysis) is expected to drive a significant increase demand. However, we argue that this is likely to gain traction towards the end of the decade. Other medium term drivers such as partial substitution of platinum for palladium in gasolin

425、e autocats and increase in heavy duty diesel vehicles in mainland China with the implementation of China 6 from mid-2021 are key for the recovery in the platinum market. The current PGM prices have rallied significantly as a result of temporary supply disruptions at Anglo Platinum and Norilsk. We do

426、 expect a short term correction but remain constructive over the medium term. Best Ideas Impala Platinum (IMP SJ; CMP: ZAR 247.15, Buy; TP: ZAR 379.00) Quality growth and strong dividends A focus on short lead time mechanised mining projects should shift Impala up the mechanisation curve from 49% me

427、chanised production in CY21e to 55% in CY25e. At this point Impala will be the second most mechanised PGM producer in our coverage. Despite these anticipated portfolio improvements, Impala platinum is the cheapest stock in the sector, currently trading on a 29% premium to the sector on a 12 month fo

428、rward EV/EBITDA basis. We argue that the stock should re-rate as growth in mechanised operations ramp up and the strong divided is sustained over the medium term. Impala is currently in a net cash position with limited growth capex requirements. As a result, we forecast an 50% of FCF (well above the

429、 30% of FCF policy) to be paid as a dividend which puts it on a compelling 10% to 12% dividend yield over the medium term. EEMEA metals and mining and the global infrastructure thesis Tightening emissions legislation is supportive over the medium term Platinum demand growth to be driven by substitut

430、ion, HDD loadings and hydrogen related demand Impala Platinum is our top pick in the sector Leroy Mnguni* Analyst, Metals & Mining HSBC Securities (South Africa) (Pty) Ltd +27 11 676 4224 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FIN

431、RA regulations Multi-Asset Emerging Markets June 2021 48 Impala and Sibanye have the lowest contribution from mechanised assets CY21e However, Impala should move up the mechanisation curve as projects ramp up CY25e Source: HSBC estimates, company filings Source: HSBC estimates, company filings North

432、am Platinum (NHM SJ; CMP: ZAR 228.38, Buy; TP: ZAR 311.00) Value accretive buy-backs and sector leading production growth profile Northam management have finalised (subject to shareholder approval) a transaction that should result in a 25% of issued ordinary shares buy-back. The funding of the buyba

433、ck can be broken into 2 transactions. The first being an 18.4% share buy-back is as a result of the settlement of the BEE preference shares that Northam has acquired in the market. The implied consideration of this share buyback is at 32% discount to the 30 WVAP value of the shares. The second porti

434、on is a buyback of a portion of the ordinary shares that remain with the Zambezi BEE SPV after settling their preference share liability in order to create liquidity in the SPV to fund its tax liabilities. This buyback accounts for a further 6.9% of the issued ordinary shares at a price that is 36%

435、below the market value of the ordinary shares. We argue that this transaction has not been priced in by the market. Our forecast re-instatement of dividends in 1H22e after the buyback has been concluded should be a key catalyst Northam has the most compelling growth profile in our South African prec

436、ious metals coverage. We forecast 15% pa growth in PGM production over FY21 to FY25. The risk to the growth forecast is mitigated by the diverse source of growth in the portfolio with Zondereinde, Booysendal South and Eland mines all expected to contribute to the growth. Northam has the most compell

437、ing growth profile in the sector Source: Company filings, HSBC estimates 0%10%20%30%40%50%60%70%80%90%100%AngloRbplatsNorthamImpalaSibanyeMechanised miningConventional mining0%20%40%60%80%100%AngloImpalaRbplatsNortham Impala -2021eSibanyeMechanised miningConventional mining900190210CY20CY

438、21eCY22eCY23eCY24eCY25e4E production -Indexed Dec 2018AngloImpalaNorthamSibanyeRBplats+7.5% pa+2.8% pa+2.2% pa+8.1% pa+14.8% pa 49 Multi-Asset Emerging Markets June 2021 Domestic-facing plays in commodity markets In addition to the direct plays on infrastructure spending there are also some indirect

439、 plays on higher commodity prices in countries which benefit from higher commodity prices. This section considers two examples; Saudi Arabia and its new investment program; and Brazil and South Africa both high metal price beneficiaries. Multi-Asset Emerging Markets June 2021 50 The Shareek program

440、market implications One very good example of state influenced infrastructure/ investment spending has recently been announced in Saudi Arabia, and is known as the Shareek (“Companion” or “Partner”) program; indeed, this is one of the best examples of this type of program in emerging markets. It is t

441、o be operated as a co-operative agreement between the government and the private sector. Details are limited, but Saudi Arabias largest companies have agreed (reportedly 24 so have signed up) to fund an increase in domestic investment with the aim of boosting growth (see “Saudi firms to cut dividend

442、s for Princes USD1.3trn plan”, Bloomberg, 30 March). While details are very sparse, spending is likely to be financed by a mix of bank lending, subsidies and various types of state capital injection, together with dividend reduction. This section looks at the broad market implications of the investm

443、ent program; then we highlight our analysts preferred way to play the story One dilemma which needs to be resolved, but on which there is little clarity, is that most of the new opportunities are in the non-energy sector while the funding fire power is in the energy sector. One exception to this lie

444、s in potential investment in renewables (see: Saudi Arabias renewables push, Sriharsha Pappu, 26 April). In general, we prefer sectors which are likely to benefit from the implied growth rather than those which are likely to fund the growth and could experience dividend pressure. This points especia

445、lly towards the banks but also consumer names, however away from the energy and petrochemical sectors (see: The new corporate investment program, John Lomax et al, 6 April). One of HSBCs nine big investment themes is future cities (see page 28-29). Riyadh could be a particularly good example of a ci

446、ty with a future. Clearly this requires both vision and an ability to finance that vision but Saudi Arabia has both. In this context, Dubai might be a model for what Riyadh could be, but potentially smarter and greener. There are already grounds for believing that Saudi Arabia wants to challenge Dub

447、ais current regional economic and commercial position, potentially by significantly developing Riyadh. A new policy, effective January 2024, has been announced, ending state contracts for companies whose regional headquarters are not located in the Kingdom. The Shareek program could clearly be a too

448、l for implementing this vision. Saudi Arabia the new investment program One of the best current examples of an EM infrastructure/ investment program Strongest opportunities in the non-energy sector, financial firepower in energy Emphasise bank and consumer sectors, despite valuation John Lomax* Head

449、 of Global Emerging Markets Equity Strategy HSBC Bank plc +44 20 7992 3712 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations 51 Multi-Asset Emerging Markets June 2021 If this is the outlook, it is likely that growth would b

450、e heavily funded by the banks and in fact this looks the easiest way to play a “future cities” theme in Saudi Arabia. Banks are expensive, but there are tailwinds from corporate financing potentially associated with Shareek (see: Corporate super-cycle potential, Aybek Islamov, 15 April) and also boo

451、ming mortgage growth (see: The mortgage revolution, Aybek Islamov, 16 March). Consumer we also see selected opportunities in the consumer sector. It is an obvious winner from Shareek, provided, as seems likely, additional investment leads to additional jobs and spending. Valuations are high, but gro

452、wth could well end up exceeding current expectations. Petchems/ energy We see the cycle turning against the sector Q3 as supply additions weigh on pricing, with valuations high (see: As good as it gets?, Prateek Bhatnagar, 22 April). In terms of the Shareek program, the petchems sector looks more of

453、 a source than user of funds. The Saudi chemical sector has been growth constrained for most of the last decade. Should investment lead to new plants, the main feedstock would be likely to be heavy liquid feed. High capex projects utilising heavy feedstock are a recipe for sub-optimal returns in our

454、 view. The energy sector, although there are opportunities in renewables, also looks more of a source of funds and dividend pressure is likely (see: Hold, moving towards cash-free positive, Gordon Gray, 22 April). Overall, we think that despite elevated valuations, the Shareek program is creating op

455、portunities in especially the bank and consumer sectors of the Saudi Arabian equity market. Multi-Asset Emerging Markets June 2021 52 Saudi Arabian banks and the domestic investment plan From retail to corporate super-cycle. Government subsidies had a visible impact on the housing and mortgage marke

456、t ecosystem. We covered these subjects in depth in our report on Saudi banks The mortgage revolution, 16 March 2021 and Know the risks, regardless of timing, 31 March 2021. We think the corporate market could be next. Weve yet to find out the shape and form of subsidies associated with the corporate

457、 investment programme, called Shareek. We think the core subsidy is likely to centre on government guarantees, following the recent example of micro, small and medium (MSME) corporate market stimulus. The new pocket of growth: MSMEs. MSME market reform went fairly unnoticed to a wider equity market.

458、 The contribution of MSME to gross loans is still low at 8% but likely to more than double to the 20% target under Vision 2030, backed by the attractive subsidised economics of this segment. For more details, please refer to our report Corporate super-cycle potential, 15 April 2021. We therefore exp

459、ect intense competition in this market segment among banks and non-bank financial institutions (NBFIs). Loans pricing is unregulated, unlike mortgages. Banks surplus capital can fund SAR1trn in new assets. Banks remain sufficiently capitalised. We estimate banks we cover collectively carry SAR102bn

460、in surplus capital, conservatively assuming a minimum CET1 ratio of 12%. Such surplus capital can generate additional asset growth of SAR0.92-1.02trn given that banks can deliver a leverage ratio of 9-10x assets/equity. In percentage terms, the additional asset growth opportunity is equivalent to 31

461、-34% of combined assets. Shareholder returns increasingly driven by book value growth. For banks the key value driver becomes book value growth and not dividends as was the case pre-2020 when banks yielded c4-5% in dividends. Following cuts in payouts in 2021, Saudi banks now yield only 1% on a trai

462、ling basis. Book value compounding may not impress at early stages. But, if the corporate lending cycle kicks in, book value growth may improve on the back of rising assets/equity multiples which would bring ROEs to higher levels. Beneficiaries are likely to be corporate focused banks: BSF- and SNB.

463、 Corporate loans contribute on average 64% to gross loans. Both these banks can leverage their ROEs to a recovery in the corporate lending cycle. Furthermore, BSFs payout policy is likely to have the least interference from the public sector. Aybek Islamov*, CFA Analyst HSBC Bank Middle East Ltd, Du

464、bai +971 4 423 6921 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations 53 Multi-Asset Emerging Markets June 2021 Best ideas Banque Saudi Fransi (BSF AB; CMP: SAR 36.80, Hold; TP: SAR34.70) We expect BSF to be one of the majo

465、r beneficiaries of Shareek program as corporate loans form 67% of gross loans as of Q1 21. We estimate BSFs NIM is most hedged against falling interest rates. Hence, we have a more optimistic view on a trajectory of NIM at BSF relative to other Saudi peers we cover. We expect BSF to be a major benef

466、iciary of mortgage price wars when switching costs fall. Near term catalysts centre on normalisation in cost of risk at a lower level. Stock trades at 13.5x/1.2x EPS/ BVPS 22e. We expect EPS growth of 86% in 2021e and 15% in 2022e. We have Hold rating on the stock as we believe normalisation in cost

467、 of risk at a lower level is a near-term positive earnings catalyst. Saudi National Bank (SNB AB; CMP: SAR53.20, Hold; TP: SAR47.20) SNB is a market leader in the corporate segment with a market share of c29% as of Q4 20. Bank has a large surplus capital of SAR39.5bn as of 2020, which accounts for 3

468、9% of surplus capital of banks we cover. We expect pro-forma EPS to decline 4% y-o-y in 2021 as we think it can be hard to repeat similar securities trading gains that banks delivered on a standalone basis last year. We estimate SNBs EPS growth could recover to 16% in 2022 as the company books 60% o

469、f integration costs this year. We believe that cost synergy guidance is conservative in view of previous mergers in Saudi Arabia and other GCC as well as our bottom up assessment. SNB trades at 14.2x/1.8x 2022e EPS/BVPS on a pro-forma basis. We have Hold rating on the stock as we estimate the merged

470、 entitys EPS growth could recover to 16% in 2022 from -4% in 2021 as the company books 60% of integration costs this year. We also believe that cost synergy guidance is conservative in view of previous mergers in Saudi Arabia and other GCC countries, as well as our bottom-up assessment. Aybek Islamo

471、v*, CFA Analyst HSBC Bank Middle East Ltd, Dubai +971 4 423 6921 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Aybek Islamov*, CFA Analyst HSBC Bank Middle East Ltd, Dubai +971 4 423 6921 * Employed by a non-US affilia

472、te of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2021 54 Saudi Arabian consumers and the domestic investment plan The Shareek program should help local players to expand into new categories with government support drivi

473、ng market share gains. Within the consumer segment the two most exposed sectors are staples producers and discretionary retail. With regard to local F&B producers in Saudi, additional focus on local investment should lead to expansion into new categories. Product categories dominated by imported pro

474、ducts that we believe local producers can successfully target include savoury snacks, biscuits and pasta. We believe potential support from the government to local producers could come in the form of subsidies and import tariffs on international players. Subsidies would create a natural advantage fo

475、r local producers, but in the past the government has introduced other measures, for example banning imported frozen chicken from plants not meeting its requirements. Furthermore, we believe that supporting local F&B producers ties in well with the Saudi governments growing focus on regional food se

476、curity. With regard to discretionary retailers, we expect to see further expansion in e-commerce, given a very low e-commerce penetration rate in Saudi (dominated by international players) as compared to other emerging markets. Continued restrictions related to COVID-19 has resulted in scaling-up of

477、 online distribution, with both Jarir (JARIR AB, CMP SAR210.00; Buy) and Extra, reporting increased contribution to sales from their e-commerce business. In the medium-term, we forecast moderate growth for retailers (mostly food producers and discretionary companies) given the easing in expat exodus

478、, significant improvement in POS data trends, resurgence in traffic due to normalization in pandemic-related restrictions and potential reduction of VAT from 15% to 5% (as per an interview with the Crown Prince, source: Arab News, 28 April 2021). Longer term the market will get a boost from an incre

479、ased in the number of employed. The Saudi government is looking for investment of SAR5trn (USD1.3trn) over the next 10 years as part of the Shareek program. We estimate the potential addition of 2m new jobs from the SAR5trn of investment, which would add 15% to the existing employed population in th

480、e country. Raj Sinha* Head of EEMEA Equity Research HSBC Bank Middle East Ltd, Dubai +971 4 423 6932 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations 55 Multi-Asset Emerging Markets June 2021 Best ideas Almarai (ALMARAI AB

481、; CMP: SAR55.30, Hold; TP: SAR58.00) Almarai is the largest F&B producer in Saudi. We believe the Saudi governments increasing focus on food security will lead to more regulations favouring local producers, and Almarai, being the leading producer in the Kingdom, should benefit from this. The current

482、 capacity utilisation at Almarais manufacturing plants is around 60% (except for poultry where its close to 100%). Hence, we believe that potential expansions would mostly be in new verticals. The group does not have any presence, or has limited market share, in a few segments, in particular in non-

483、fresh packaged foods. It has talked about investing in the logistics required to support its long life offering and entering more product categories in order to increase its target market. Product categories dominated by imported products that we believe Almarai can successfully target include savou

484、ry snacks, biscuits and baby food. Furthermore, as it introduces a more apt logistics network we see Almarai taking market share from international players in segments such as cakes. Extra (EXTRA AB; CMP: SAR123.40, Buy; TP: SAR134.00) Extra the leading consumer electronics retailer (21.4% market sh

485、are in 2020) in Saudi is our preferred consumer stock in Saudi. Extra has consistently gained market share in the last 3 years which has supported an earnings CAGR for 2017-20e of 26% in the last three years. We believe that the consumer finance business which in 1Q 2021 generated close to 25% of th

486、e group profitability ramp up will be a key driver of earnings growth in 2021 and the medium term. On May 26th 2021 its consumer finance entity got approval to launch a credit card which should further support growth in this segment. Overall we forecast a continuation of double-digit earnings growth

487、 as we still see room for market share gains in big appliances/ consumer durables, and Extras e-commerce offering should ensure it remains competitive in other categories. Our target price of SAR134 implies a PE of 18.9x on FY22e EPS, which we believe is fair in the context of an EPS CAGR for FY20-2

488、3e of 23% and average ROE of 35% in that period. Raj Sinha* Head of EEMEA Equity Research HSBC Bank Middle East Ltd, Dubai +971 4 423 6932 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Ankur Agarwal*, CFA Senior Analyst

489、 HSBC Bank Middle East Ltd, Dubai +971 4 423 6558 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2021 56 Country sector/ overview The principal large markets benefitting from an extended

490、 metal price cycle are Brazil and South Africa. In some respects, the two markets are similar stories. As commodity exporters, both should be supported by buoyant commodity prices; however, both have elevated levels of public sector debt which makes markets vulnerable to higher US bond yields (and o

491、f course potential beneficiaries of HSBCs view that bond yields ultimately fall (“Humble Pie”, Steven Major, 26 February). So far this year, they have behaved in different ways with South Africa outperforming Brazil. Looking forward, in our view, some of the reasons for differential performance ough

492、t to recede. We have covered the case for material stocks in the two markets elsewhere in this document. Here, we focus on domestic exposure in both markets as an indirect beneficiary of ongoing metal price strength. We outline the general case for both markets and highlight our best ideas. One comm

493、on theme across both markets has been the relative weakness of financials. Here, lower US bond yields, by reducing both Brazilian and South African fiscal risk could be the key potential external catalyst. Higher domestic interest rates and local cyclical economic recovery will also help. Chile is a

494、lso clearly a potential play on the commodity price environment, but for the time being the positive case for the market is offset by political risk (“Chile after the constituent assembly elections”, John Lomax, 18 May). Domestic-facing plays in Brazil and South Africa The principal large markets be

495、nefitting from an extended metal price cycle are Brazil and South Africa Cheap valuations and a constructive local macro environment should allow domestic South Africa to continue to perform well While in our view, the factors that have held domestic Brazil back should progressively recede John Loma

496、x* Head of Global Emerging Markets Equity Strategy HSBC Bank plc +44 20 7992 3712 Aseem Madan* Associate Bangalore * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations 57 Multi-Asset Emerging Markets June 2021 FTSE Brazil & So

497、uth Africa Market and Sector performance (USD) 1M YTD 9-Nov-20 Brazil 9% -1% 16% Basic Materials 18% 32% 81% Consumer Discretionary 1% -14% -13% Consumer Staples 10% 8% 23% Energy 10% -13% 13% Financials 8% -10% 7% Health Care 5% -2% 8% Industrials -2% -5% -6% Real Estate 5% NA NA Technology 1% 1% 2

498、% Telecommunications 3% -13% -3% Utilities 5% -8% 1% South Africa 3% 15% 20% Basic Materials 4% 24% 38% Consumer Discretionary 4% 16% 22% Consumer Staples 4% 7% 7% Financials 8% 10% 26% Health Care 12% 29% 29% Industrials 5% 15% 34% Real Estate 8% NA NA Technology -5% 8% 2% Telecommunications 8% 41%

499、 37% Date: 1 June 2021 | Source: FTSE Russell, Factset, HSBC Brazil Starting with Brazil a number of factors have impeded Brazil compared with South Africa. The COVID-19 experience has been more traumatic, political risk has increased and inflation has been higher. We expect all of these obstacles t

500、o diminish. In general, the news around COVID-19 has not been encouraging in Brazil this year. Vaccination has not been sufficient to stop a rise in new cases and deaths this year. This can be explained by Carnival and summer vacations. Given little adherence to social distancing, vaccination is the

501、 only way to stop virus spread. In fact, over 15% of the population has now received at least one dose of a COVID-19 vaccine and the vulnerable part of the population should be protected by July. The chart below shows that both new cases and deaths do now seem to be falling. Brazil - Daily new cases

502、 and deaths to June 1 Source: Ourworldindata, HSBC Heightened political risk has been another factor restraining Brazil. One aspect of this has been political involvement in Petrobras (PETR3 BZ, BRL 26.65; Buy), but in HSBCs view this may now be overstated (Upgrade to Buy: back to being a value play

503、, Lily Yang, 31 March). Another 00400050000200004000060000800000Feb-20Apr-20Jun-20Aug-20Oct-20Dec-20Feb-21Apr-21New CasesNew Deaths (RHS) Multi-Asset Emerging Markets June 2021 58 has been the latest judicial ruling over-turning corruption allegations against former President L

504、ula, which if it stands could allow him to contest the 2022 elections. Based on recent opinion polls (e.g. Exame/ Ideia 19-22 April), it appears that he could have a chance at re-election if allowed to stand. Brazilian equities performed strongly through much of Lulas earlier time in office (2003-11

505、). In our view, there is scope for these political risk premia to fall. Inflation has also played a role in holding the market back. The headline inflation rate has picked up sharply to 6.8% in April from 4.5% in December. Given Brazils history and institutional framework, the rapid rise in inflatio

506、n is clearly a concern. However, there are a couple of reasons not to exaggerate the threat. The rise in inflation is primarily down to higher food and energy prices; so far this is not getting significant wider traction. At the same time the central bank has moved pre-emptively to head off the infl

507、ationary threat. The Selic rate has been increased 150bp to 3.5%. HSBC expects this to rise to 5.25% by the end of this year and 6.25% at the end of 2022. A combination of higher nominal interest rates and a fall in the headline inflation rate (back towards the underlying rate) should put the real i

508、nterest rate back in positive territory and reduce the inflation and currency risk premium. A benign external environment (buoyant commodity prices, lower USD bond yields), cheap valuations, strong earnings momentum and lower political and currency risk premia should all be positive for domestic-fac

509、ing Brazilian stocks. E-commerce is thematically appealing. Despite twice as many internet users and 40% of GDP vs the US, EM ex Asia consumer tech market cap is just 13% of the US comparable (see: The digital journey has just begun, Ravi Jain, April 2021. For banks, NIM pressures should ease with h

510、igher rates. BCB data show a continuous acceleration in loan growth. Banks have accumulated large loan-loss reserves to cover any new problem loans (see: LatAm Financials, Carlos Gomez-Lopez and Neha Agarwala, 20 April). Industrials are a cyclical recovery play, supported by local infrastructure spe

511、nd. We like the utility sector as a reform and bond yield play. South Africa South Africa has performed significantly better than Brazil this year and we expect the market to keep performing well. The COVID-19 news has, contrary to expectations, been surprisingly positive. Political risk has fallen.

512、 Inflation and interest rate expectations have been contained. Valuation for both the market as a whole and domestic facing names remains attractive. COVID-19 has clearly been challenging for South Africa. A virulent new strain of the virus has spread, there have been delays in the vaccination proce

513、ss and there were worries about a “third wave” as summer approached. Nevertheless, so far the number of new cases and deaths has remained at relatively low levels. South Africa - Daily new cases and deaths Source: Ourworldindata, HSBC 0050060070080090005000000025000Mar-20May-20

514、Jul-20Sep-20Nov-20Jan-21Mar-21May-21New CasesNew Deaths (RHS) 59 Multi-Asset Emerging Markets June 2021 In our view, developments in political risk have also been critical in shaping the behaviour of South African asset prices. In particular, the stance taken against corruption has been the lens thr

515、ough which investors have evaluated political risk. The National Prosecuting Authority (NPA) appears to be moving forward on this agenda surprisingly forcefully. The NEC has compelled ANC Secretary General Ace Magashule to step aside from his role. The Zondo Commission has asked the Constitutional C

516、ourt to impose a two-year custodial sentence on former President Zuma (SABC News, 25 March). As in a number of other countries, COVID-19 appears to have acted as a catalyst for action to improve governance. Progress on this count has reduced the risk premium on South African assets and, in our view,

517、 has scope to reduce it further. At the same time, the inflation outlook is less problematic than in Brazil. Headline inflation rose to 4.4% in April but still within the central banks target range (South Africa, David Faulkner, 19 May). However, core inflation remained lower at 3%. HSBC thinks that

518、 headline inflation will peak at 5.1% in May. Given the deterioration in the external financing environment, we are expecting a 25bp interest rate hike in Q3 with 125bp of tightening by the end of 2022. However, overall, inflation does not look a serious threat to the South African equity market. Va

519、luations of the South African equity market remain attractive. There are a range of themes to play in domestic-facing sectors. Banks have strong recovery prospects and should continue to benefit from surprisingly strong asset quality (and in particular contained credit loss-ratios). Potential increa

520、ses in dividend yield are a valuation draw (Earnings recovering sooner than expected, Henry Hall, 3 December). Despite the pressure on the consumer, we also find selected ideas in the retail space both apparel and food mainly in terms of market-share gains (Income drivers, consumption and the COVID-

521、19 shock, Nick Webster, 20 April). The healthcare sector offers opportunities both in valuation terms but also as a vaccine play (Buy: back to the old formula, Raj Sinha, 25 March). Multi-Asset Emerging Markets June 2021 60 Brazil Best ideas Banco do Brasil (BBAS3 SA; Buy; CMP BRL 33.98; TP BRL 52.0

522、0) Banco do Brasil is the high-beta stock among Brazilian banks; because of its government ownership, it is used at times as a policy tool. Historically, due to its lower capitalization, and domestic focus, its price has been more volatile and sensitive to perceptions of sovereign risk; thus, it typ

523、ically rallies when the Brazilian cost of equity declines, because of improved fiscal risks or a better external position of the country with better terms of trade, such as higher iron ore prices. We note its particular strength in the rural areas and lending to agriculture, which has low credit cos

524、ts and is currently benefitting from the boom in soft commodity prices, and its improved capital ratio (a CET1 of 12.9% is at par with its private sector peers). Despite these positive factors, the stock is trading at only 0.8x PBV and 5.4x 2021e earnings, in part due to a recent change in managemen

525、t. Banco do Brasil has a relatively small direct exposure to the infrastructure sector, although it supports states and municipalities in their capital expenditure investment programs, mostly with Treasury guarantees, with annualised disbursements of approximately USD200 million per year. A differen

526、t bank owned by the Federal Government, Caixa Economica Federal, focuses on sanitation (BRL 7.4 billion in 2020) and housing (BRL 59 billion), while yet another bank, the BNDES, provides subsidised long-term funding for many long term investment projects. On the other hand, Banco do Brasil is indire

527、ctly exposed to the price of iron ore through its pension fund, Previ; about 25% of Previs equity portfolio, or BRL 12.5 billion as of December 2020, was invested in Vale, the Brazilian mining giant. Since Banco do Brasil is responsible for 50% of Previs actuarial obligation, this is equivalent to B

528、RL6.2 billion, or 7% of Banco do Brasils market capitalization, making BB partially a play on iron ore prices. Itau Unibanco (ITUB4 SA; CMP BRL 30.60; Buy; TP BRL 36.00) Itau is the largest private bank and the leading corporate bank in the country, it should benefit from infrastructure spending fro

529、m structuring transactions in the capital markets (securitizations, equity offerings, derivatives) as well as from direct lending. Itau is also the most international of the Brazilian banks, with a presence in Argentina, Colombia, Chile, Panama, Paraguay and Uruguay; loans in these countries account

530、 for 30% of the total loan portfolio and increase its exposure to commodities (copper in Chile, oil and coal in Colombia, timber, meat and grains in Argentina, Paraguay and Uruguay). We have a Buy rating on Itau, with attractive valuation and an identifiable catalyst: the distribution of the 40.5% s

531、take held in XP to Itau shareholders; the current market value of the XP shares is equivalent to 16% of Itaus stock price, which should take place in the next four months according to management. CCR (CCRO3 BZ; CMP BRL13.94; Buy; TP BRL21.50) We expect CCR to be a major beneficiary in the upcoming s

532、everal highway and mobility concession auctions that are in the pipeline for this year as part of Brazils strong infrastructure focus. Additionally, the companys strong cash position of BRL3.6bn and low current leverage of 2.4x could help it pursue the future growth opportunities, including the pote

533、ntial acquisition of distressed assets. CCR recently won the auctions for a 30-year concession to operate lines 8 & 9 CPTM in mobility and also two blocks (in the Southern and Central regions) in airports. With this CCR became the largest airport operator in Brazil and could capture synergies in its

534、 operations. This also strengthens the diversity of CCR operations in the urban mobility and airports segments. We expect the segments to have accelerated recovery as restrictions due to pandemic are relaxed. Also, the company will benefit from the economic rebalancing of concession contracts includ

535、ing the approved gross compensation of BRL705m for delay in the Carlos Gomez-Lopez, CFA Head of EM and LatAm Financials HSBC Securities (USA) Inc. +1 212 525 5253 Neha Agarwala, CFA Analyst, LatAm Financials & Fintech HSBC Securities (USA) Inc. +1 212 525 5418 Santhosh Seshadri*, CFA Analyst HSBC

536、Securities and Capital Markets (India) Private Limited santhosh.seshadrihsbc.co.in +91 80 4555 2758 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations 61 Multi-Asset Emerging Markets June 2021 phase 1 substation construction

537、and the cash compensation due owing to delay in Phase 2 work in respect of Morumbi and Vila Sonia station. MercadoLibre (MELI US; CMP USD1,368.87; Buy; TP USD1,950.00) We like MELI given its market share leadership in Brazil, SKU depth, aggressive logistics build-out and innovation around developing

538、 the wallet use case combined with a loyalty program. The company has ramped up its managed network penetration to 83% in Brazil from mid to high single digits in 2018 driving down delivery times, improving NPS and driving robust GMV growth. Within fintech, MELIs main competitive advantage is the ec

539、osystem, providing a pool of new users, both consumers as well as small merchants, that lowers customer acquisitions costs and allows for cross-selling opportunities. Magazine Luiza (MGLU3 BZ; CMP BRL20.35; Buy; TP BRL26.00) Magazine Luiza has a differentiated approach to e-commerce, fintech and mer

540、chant services in Brazil. In its core business, the company continues to grab share from regional electronics/appliances brick-and-mortar (accelerating rapidly post COVID-19) and building its marketplace and logistics capability. Magalu has made over 15 acquisitions in the last 2 years that could la

541、y the foundation for Magalu as a Service for small and mid-sized retailers, restaurants and online sellers. Given the companys success in digitally transforming its brick and-mortar business to a successful omni-channel operation, we see Magalu in a strong position to help replicate that for several

542、 smaller businesses in Brazil. Ravi Jain Senior Analyst, EM Consumer & Retail HSBC Securities (USA) Inc. +1 212 525 3442 Ravi Jain Senior Analyst, EM Consumer & Retail HSBC Securities (USA) Inc. +1 212 525 3442 Multi-Asset Emerging Markets June 2021 62 Lojas Americanas (LAME4 BZ, CMP: BRL21.40; Bu

543、y; TP: BRL29.00) Lojas Americanas has among the most extensive brick n mortar store network within listed retailers in Brazil and owns a 62% stake in B2W (39% post-merger) that is within the top three Brazil e-commerce companies by market share. We see significant benefits from the B2W merger includ

544、ing improved omni-channel efficiency, stronger FCF investment ability and faster M&A integration. The companies have a combined active customer base of 48m that should also help drive stronger fintech engagement via their mobile wallet Ame. SABESP (SBSP3 BZ; CMP BRL38.80; TP BRL62.00 / SBS US; CMP U

545、SD7.57; TP USD11.50) We like Brazils largest water utility SABESP as an infrastructure growth play with strong cash flow generation and organic growth capex that is predicated to yield an attractive regulated return of the above companys cost of capital and at two digit ROEs. The stock also trades i

546、nexpensively, with hidden value should it also be able to deliver efficiency gains from cost cutting and/or from the acquisition of new services contracts. The stock trades at 0.8x EV/RAB (Regulatory Asset Base), over a growing RAB at accretive tariffs. At our TP, the stock would trade at c1.0x EV/2

547、021e RAB and 7.5-6.9x EV/EBITDA, 13-12x PE, and a 2% dividend yield for 2021-22e. Strong organic growth. SABESP is very efficient company for SOE standards in Brazil and has above-average penetration services in its wealthier Sao Paulo State. Yet, the company has budgeted to double capex in 2020-24

548、versus the 2015-20 period just to reach commitments imposed by the new legislation. The water and waste sector will benefit from a massive amount of investment over the coming decades, as the Brazilian Federal Government has approved new legislation that requires that 99% of the population has acces

549、s to potable water and 90% has sewage collection by 2033. The goal is to have treated sewage at 90% by the same year. A 7% tariff hike in May 2021, more to come. The company has just undergone its periodical rate review with a tariff hike above 7% granted in early May. The regulator has agreed with

550、above-inflation tariff adjustments in the coming three years. This, combined with our assumption of cost hikes in line with inflation, should pave the way for higher EBITDA and dividends. SABESP is entitled to receive a regulated 8% ROA post taxes in real BRL terms at least until 2024YE, when the ne

551、xt rate review happens. After then, it will benefit from market-based regulated returns until services contracts expire. Room for cost cutting. We see room for profitability expansion from economies of scale and opex and capex efficiency gains, but have not yet reflected them in our valuation. Our c

552、onservative approach is due to increased investor skepticism of SOEs being able to cut costs. We, however, see room for the company to surprise on the positive side. Stronger BRL means higher EPS. SABESP is one of the few utilities to benefit from a stronger BRL, as the company has FX denominated de

553、bt and its dividends are capped at 25% of earnings despite strong CF generation to pay above that. Ravi Jain Senior Analyst, EM Consumer & Retail HSBC Securities (USA) Inc. +1 212 525 3442 Lilyanna Yang, CFA Analyst, LatAm Oil & Gas, Utilities, Petrochems HSBC Securities (USA) Inc. +1 212 525 0990

554、 63 Multi-Asset Emerging Markets June 2021 South Africa Best ideas FirstRand (FSR SJ; CMP ZAR56.76; Buy; TP ZAR68.00) During 2020 and for the first few months of 2021, FirstRand adopted a cautious approach with regard to lending as reflected in a marked slowdown in loan growth relative to its three

555、peers. The relative slowdown was especially apparent in VAF (auto-loans) where aggressive drives to gain market share by some its competitors has reduced margins to levels where FirstRand maintains returns are unattractive. In the mortgage space it has also not cut prices and raised LTVs like some o

556、f its competitors. It is thus preferring to preserve its return profile rather than lending at prices that will dilute returns. Its provisioning remains the most conservative in the peer group, especially against performing loans (Stage 1 and 2 loans in terms of IFRS9). In FY20 FirstRand was the onl

557、y bank in the peer group to report an ROE (12.9%) greater than its COE (12.5%). We forecast strong recovery in its ROE to 17.6% in FY22 and 19% in FY23. At the current market price the share is trading at 1.8x forecast June 2022 (ie roughly a year from now) book value which we think is attractive in

558、 light of its forecast return profile. Standard Bank (SBK SJ; Buy; CMP ZAR135.38; TP ZAR159.00) Stanbank showed the strongest loan growth in the peer group during 2020 with that trend continuing so far in 2021 (per the regulatory returns). The growth is occurring in all loan categories, including un

559、secured. Stanbanks focus seems to be volume and not on returns. We are concerned about what this focus will mean for its longer-term returns and have factored this into our earnings forecast and valuation. Nonetheless, so far Stanbank has been right to be more willing to lend with South Africa conti

560、nuing to escape further strict lockdowns and with COVID-19 cases remaining low. It continues to be the best geographically-diversified bank in the peer group with 26% of its capital invested in African countries. These economies have been more resilient during the COVID-19 pandemic than South Africa

561、 which has aided Stanbanks earnings growth. We forecast this to continue. Its ROE in Africa remains above 20%, although COE is, of course, higher in these geographies than in South Africa. We forecast Stanbanks ROE to reach 14.2% in 2022 and 15.5% in 2023. In light of these forecast returns its curr

562、ent valuation at 0.9x forecast December 2022 book value seems attractive to us. Henry Hall* Banks Analyst HSBC Bank Middle East Ltd, Dubai +27 11 880 1855 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Henry Hall* Banks

563、Analyst HSBC Bank Middle East Ltd, Dubai +27 11 880 1855 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2021 - 64 Shoprite (SHP SJ; CMP ZAR156.03; Buy; TP ZAR180.00) We have argued that

564、Shoprite has the opportunity to assert its dominance in SA Food Retail, through its size and scale advantages, with a chance to position the business for long-term profitable growth, (Shoprite (SHP SJ)- Upgrade to Buy Opportunity for SHP to reassert its dominance in SA Food Retail, 2 September 2020)

565、. Affordability is key, and an investment in price is critical to support the consumer at this juncture. We believe that, with further investment, SHP could put significant pressure on its competitors and cement its leadership position. The companys strong performance in H121, delivering market shar

566、e gains of ZAR1.3bn, along with GP and trading margin expansion of 60bps is consistent with our thesis. The groups growing dominance and buying power is evident in the fact that RSA generated incremental cash sales 3x that of Pick n Pay (PIK SJ, CMP ZAR 58.15; Hold) in FY20. The Xtra Savings program

567、me, now the largest in the country with 17m members, is a further step in the groups price investment strategy and digital transformation, and should help drive further market share gains. The increasing focus on the fresh and premium food categories through the FreshX Checkers format is another pos

568、itive, given some structural shift to in-home dining. Finally, the shift in capital allocation and improving FCF generation should drive improved shareholder returns. Shoprite (SHP SJ)- Buy: Still affordable, much like its products, 18 March 2021. Mr Price (MRP SJ; Hold; CMP ZAR233.02; TP ZAR236) In

569、 delivering its new vision and strategy, with a stated goal of increasing its market cap by c50% to become Africas most valuable retailer, Mr Price cannot be faulted for its lack of ambition (Mr Price (MRP SJ) - Downgrade to Hold: An A for ambition, 3 Jun 2021). The company has an ambitious strategy

570、 to deliver consistent market leading growth, with a supportive balance sheet and strong FCF. MRP will continue to focus on domestic opportunities, removing the distraction and often pitfalls of international expansion. It has identified multiple areas of opportunity for growth, either organically w

571、ith the launch of new businesses/categories, or through acquisitions. Its strong H221 performance proved not only its resilience in the midst of extreme consumer uncertainty, but also its ability to drive new organic growth channels. We forecast MRP to grow sales ahead of the market in the medium te

572、rm, supported by an improving customer offer and further market share gains across multiple divisions (+150bps in FY21), resulting from the launch of new categories including beauty, baby, school uniforms and gifting. These additions provide new levers for further non-comparable growth (+ZAR500m to

573、date), and give MRP greater exposure at the value end of apparel retail in SA, to a broadly similar customer, reinforced through the acquisition of Power Fashion. MRPs positive exposure to more casualwear vs. formalwear, and home improvement categories, given the increasing work-from-home culture, s

574、hould also support top line growth. We continue to believe that MRP is best placed in SA Apparel Retail, to navigate the current tough economic environment, where consumers are very price and value conscious (South Africa Consumer- Income drivers, consumption and the COVID-19 shock, 20 Apr 2021). At

575、 an FY22e PE of 15x, valuation looks full, in our view, and we rate the stock Hold.Nick Webster* Head of Research, South Africa HSBC Securities (South Africa) (Pty) Ltd +27 11 676 4537 Shaun Chauke* Analyst HSBC Securities (South Africa) (Pty) Ltd +27 11 676 4209 * Employed by a non-US affiliate o

576、f HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Nick Webster* Head of Research, South Africa HSBC Securities (South Africa) (Pty) Ltd +27 11 676 4537 Shaun Chauke* Analyst HSBC Securities (South Africa) (Pty) Ltd +27 11 676 4209 * Employed by a non-US af

577、filiate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations 65 Multi-Asset Emerging Markets June 2021 Netcare (NTC SJ; CMP ZAR15.50; Buy; TP ZAR16.50) Netcare is the largest private hospital group in South Africa, with a healthy balance sheet and strong FCF g

578、eneration potential. Netcare recently reported its H1 2021 numbers (Sept-March), and whilst revenues and margins were down YoY due to the emergence of a more contagious COVID-19 variant in South Africa, the numbers were much better than that for H2 2020. Both periods were impacted throughout by the

579、COVID-19 pandemic, however Netcare used its experience from the first wave to become more efficient in its allocation of resources in the second wave. The short term outlook is determined by how quickly South Africa is able to cope with COVID-19 and patients return for elective procedures. Longer te

580、rm, the South Africa private sector is currently seeing an ageing set of beneficiaries which results in rising ALOS (average length of stay) leading to slower asset turn at the hospitals and negatively impacts the returns. We believe that SA private hospitals can target the public sector and allocat

581、e appropriate assets and resources to this lower income segment and still deliver acceptable returns; Netcare seems to be making small steps towards this segment and hence is our preferred company. The group trades at CY22e PE of c12.5x, which is the least expensive among the three listed South Afri

582、can hospitals. Bidvest (BVT SJ; CMP ZAR196.07; Buy; TP ZAR220.0) The stand-out features in the most recent H121 results for us (The best is yet to come, 8 Mar 2021) were the strength of the Services division, cost discipline and excellent cash generation, all of which have been central to our positi

583、ve investment case (Lindsays last dance, 16 Sep 2020). We believe that FY21e-23e earnings should further benefit from the continued rebound in economic activity, strong freight volumes, which now include LPG, the resilience of its annuity income streams (65% profits) and acquisitions. The cost initi

584、atives across the group should support margins where there are still pressure points, and we expect strong cash generation to continue, as its operations ramp up further. Based on our forecasts, Bidvest is trading on a FY22e PE multiple of 11.9x, a 24% discount to its 5YR average and not expensive i

585、n our view, given the resilience of the business, future growth prospects, high returns profile and strong cash flows. Raj Sinha* Head of EEMEA Equity Research HSBC Bank Middle East Ltd, Dubai +971 4 423 6932 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qual

586、ified pursuant to FINRA regulations Nick Webster* Head of Research, South Africa HSBC Securities (South Africa) (Pty) Ltd +27 11 676 4537 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Multi-Asset Emerging Markets June 2

587、021 66 Valuation and risks Valuation Risks MMG 1208 HK Current price: HKD4.30 Target price: HKD7.50 Up/downside: +74.4% We have a Buy rating on MMG with target price of HKD7.50, derived from our target P/B multiple of 3.8x, 2.5 standard deviations above the long-term average to reflect our favourabl

588、e outlook for copper driven by the macroeconomic recovery. Our target price implies 74.4% upside. Downside risks: (1) A new outbreak of COVID-19 creates additional demand headwinds; (2) an increase in new copper mine supply and copper scrap more than offsets copper demand growth, putting pressure on

589、 copper prices; and (3) sales disruption due to community tensions in Peru if the new unrest escalates and expands into other regions. Buy Howard Lau*, CFA | .hk | +852 2996 6625 Angang Steel 347 HK Current price: HKD4.91 Target price: HKD8.00 Up/downside: +62.9% We have a Buy rating on Angang-H wit

590、h target price of HKD8.00. We believe potential policies on emission control shall further improve the bargaining power of leading players, like Angang. Our TP is based on a target PB multiple of 1.0x, in-line with Angangs peak multiple over 2017-2018 (the last upcycle when margin expanded as a resu

591、lt of government forced capacity cuts). It is slightly higher than two standard deviations above its historical average PB since 2012 but much lower than what the company was trading at in the last two upcycles in 2007 and 2009. Our target price implies 62.9% upside from current levels. Downside ris

592、ks: 1) Tighter emission standard that lowers industry supply; 2) higher-than expected steel prices driven by stronger-than-expected demand; 3) lower-than-expected raw material costs or lower production costs from operating efficiency enhancement; 4) faster-than-expected structural change in the indu

593、stry; and 5) potential SOE reform. Buy Howard Lau*, CFA | .hk | +852 2996 6625 Zoomlion 1157 HK / 000157 CH Current price: HKD9.08 / RMB10.92 Target price: HKD15.20 / RMB12.90 Up/downside: +67.4% / +18.1% We value Zoomlion based on a PB methodology. We use PB multiple of 1.8x, similar to the average

594、 PB during FY12 as we think the sector has entered a late cycle and our estimated FY22 ROE of 19% is closer to FY12 ROE of 19% (vs FY10-11s ROE of over 20%). We apply this to our book value per share estimate for FY22e of RMB7.14, yielding A-share target price of RMB12.9. Our A-share target price im

595、plies 18.1% upside we have a Hold rating on the A-shares as we think raw materials price hike may post cost pressure for Zoomlion. For our H-share target price, we use the same methodology as above and, using our FX teams end-2021 forecast RMB-HKD exchange rate of 1.18, we derive fair value TP of HK

596、D15.2. Our H-share target price implies 67.4% upside. We have a Buy rating on the H-shares. Key downside risks for H and A shares: Low transparency of operating statistics; EPS dilution from the A-share placement; weaker-than-expected residential property construction activity; and price competition

597、 for construction machinery products. Key upside risks for A shares: Stronger-than-expected sales for construction machinery in FY21e; potential recovery in the agriculture machinery business; improvement in profitability from digital transformation and expansion of EBIT margin from operating levera

598、ge. Buy / Hold Helen Fang* | .hk | +852 2996 6942 Weichai Power 2338 HK / 000338 CH Current price: HKD17.98 / RMB18.00 Target price: HKD22.70 / RMB19.20 Up/downside: +26.3% / +6.7% We use a DCF-based sum-of-the-parts (SOTP) approach to value Weichai Power, separately valuing the core business (inclu

599、ding diesel engines, complete vehicles, and automobile components) and the companys KION overseas subsidiary, as we expect KION to remain a major contributor to the companys sales and profits. We value Weichais 45% stake in KION (KGX GR, EUR89.64, Hold, TP EUR93.00) based on the Bloomberg consensus

600、target price of EUR91.05 as of 6 May 2021. Our key DCF assumptions are, including a risk-free rate of 2.5%, an equity risk premium of 5.0%, and a (rounded) beta of 1.12. We arrive at a WACC of 7.6%. Our SOTP-derived H-share target price is at HKD22.70, implying upside of 26.3% from the current share

601、 price. We have a Buy rating on the H-shares. Our A-share target price is converted from our H-share target price based on our FX teams end-2021 forecast for RMB-HKD of 1.18. Our A-share target price is at RMB19.2, implying upside of 6.7% from the current share price; we have a Buy rating on the A-s

602、hares as we think the company will benefit from long-term market share gains in both the engine and intra-logistics solution industries. Please refer SOTP details in next section. Key downside risks: 1) If Weichais R&D efforts lag those of its peers, and products fail to meet customer needs, this co

603、uld hurt sales and the share price. 2) If business execution is poor after M&A activity, it could hurt the stocks performance. 3) If component or raw material costs increase sharply, or the company encounters more severe price competition, sales could be lower than we expect. 4) If there are unexpec

604、ted changes in industry regulations, this could hurt earnings as the companys global operations also require Weichai to comply with the environmental laws and regulations in other countries, some of which may be more stringent than those in mainland China. 5) If the Dematic brand delivers lower-than

605、-expected costs and sales synergies, customers might be reluctant to accept KIONs one-stop shop strategy, especially if competitors aggressively defend their market share. Buy / Buy Helen Fang* | .hk | +852 2996 6942 67 Multi-Asset Emerging Markets June 2021 Valuation Risks Airtac 1590 TT Current pr

606、ice: TWD992.00 Target price: TWD1,470.00 Up/downside: +48.2% To value Airtac, we use a target forward PE for 2022e of 33x, which is 1 standard deviation above the last upcycles average forward PE in 2017 as we believe the current abundant liquidity should drive the market valuation higher than in th

607、e last upcycle. We apply our target forward PE to our EPS estimate for 2022e of TWD44.65 which results in our rounded target price of TWD1,470, implying 48.2% upside. We have a Buy rating. We believe that Airtac could enjoy stronger growth momentum during a longer-than-previous upcycle and that ther

608、e is further upside potential from linear guide mass production. We also think the new linear guide business could enhance Airtacs competitiveness and enrich its product offering Downside risks include: Potential price competition from major rivals; slower-than-expected client acquisitions for new p

609、roducts; volatility in raw material prices; slower-than-expected liner guide mass production, and longer-than-expected COVID-19 outbreak, which could weaken orders volume, restrict shipments, and suppress production Buy Helen Fang* | .hk | +852 2996 6942 CNOOC 883 HK Current price: HKD8.71 Target pr

610、ice: HKD11.90 Up/downside: +36.6% We have a Buy rating on the stock with target price of HKD11.90. Our target price is based on our target P/B multiple of 0.88x, equivalent to the average forward P/B for the past two years, applied to our BVPS for 2022e of RMB11.47, then converted using our forex te

611、ams 2021e HKD:RMB cross rate forecast of 1.18. Our target price of HKD11.90 implies 36.6% upside. We rate the stock Buy given our positive underlying earnings momentum outlook driven by our price deck assumptions of Brent at USD65/b in 2021e/2022e and the companys guided volume increases. Downside r

612、isks: share price implications of US executive order 13959, including removal from global equity indices and delisting of ADRs from the NYSE; unforeseen consequences of the COVID-19 outbreak; lower-than-forecast oil prices; disappointing dividend payments; financial and energy market price volatilit

613、y; production interruptions; unexpected cost inflation; higher-than-expected taxes; failed exploration; value-destructive M&A; potential exclusion of hydrocarbon-related stocks from investment portfolios. Buy Thomas C. Hilboldt*, CFA | .hk | +852 2822 2922 China Gas Holdings 384 HK Current price: HK

614、D28.65 Target price: HKD35.00 Up/downside: +22.0% Our DCF-based target price is HKD35.00. We assume a risk-free rate of 2.5%, an equity risk premium of 5%, and an equity beta of 1.1, resulting in a WACC of 6.5%. We also assume a terminal growth rate of 1%. Our target price implies 22% upside and we

615、therefore have a Buy rating on the stock. The valuation looks attractive at a 12x FY March 2022e PE with a forward net profit CAGR of 15.7% over FY21-23e. Downside risks: Future connection fee cuts; lower than-expected industrial gas demand; future city gas price increases not being passed through t

616、o customers; fewer than-expected new residential households; and a further cut in dollar margins due to seasonal demand in winter. Buy Evan Li* | .hk | +852 2996 6619 Xinyi Solar 968 HK Current price: HKD14.16 Target price: HKD15.00 Up/downside: +5.9% Our target price is HKD15.00 and is based on a S

617、OTP approach. We value the solar glass segment using a DCF (2.5% risk free rate, 5% equity risk premium, 1.5 equity beta, 10% cost of equity, 8.1% WACC and a terminal growth rate of 3%). We also value the solar farm segment (ex-Xinyi Energy) using a DCF (2.5% risk free rate, 5% equity risk premium,

618、1 equity beta, 7.5% cost of equity, 5.6% WACC and 2% terminal growth rate). We value Xinyi Energy (3868 HK, CMP HKD3.78, Buy) at our target price of HKD4.80. Our target price for Xinyi Solar of HKD15.00 implies 5.9% upside; we therefore have a Buy rating for its market leadership in solar glass and

619、upside to volume due to strong installations in mainland China. Please refer to the SOTP details in the next section. Downside risks: Lower-than-expected average selling price for solar glass; slower-than-expected solar farm installations; grid curtailment; increase in solar glass capacity; increase

620、 in competition in the engineering, procurement, and construction segment; international trade tensions; and failure to obtain quotas for solar project development. Buy Evan Li* | .hk | +852 2996 6619 Multi-Asset Emerging Markets June 2021 68 Valuation Risks Nari Technology 600406 CH Current price:

621、RMB30.30 Target price: RMB38.00 Up/downside: +25.4% Our target price of RMB38.00 is derived from our DCF valuation model. The key assumptions in our DCF model include: 1) cost of equity (COE): We use a COE of 8.8%. This is derived from a risk-free rate of 2.5%, a market risk premium of 6.0% and a be

622、ta of 1.05; (2) cost of debt (COD): We assume the pre-tax cost of debt to be 4% and after-tax cost of debt to be 3%. We use our 2021e debt-to-capital ratio of 5% as our long-term debt-to-capital ratio; (3) operating cash flow to grow 9% per annum: We expect operating cash flow (before changes in wor

623、king capital) to expand at a CAGR of 9% in 2019-29e, reflecting stable growth in demand; (4) capital expenditure (capex): We assume steady capex of about RMB300-400m per annum in 2020-29e, reflecting steady growth of investment in construction projects; and (5) a terminal growth rate at 2% and we as

624、sume the company reaches a steady growth period after 2029. Our target price implies 25.4% upside; we therefore have a Buy rating. Downside risks: 1) weaker-than expected investment in power network communication; 2) lower-than expected investment in national grid distribution network; 3) significan

625、t order delays or cancellation; 4) higher than-expected receivables provision; and 5) weaker-than-expected margin on intensified competition. Buy Corey Chan (S01) | | +86 21 6081 3801 LG Chemical 051910 KS Current price: KRW825,000 Target price: KRW1,060,000 Up/downside: +28.5% Our targe

626、t price is derived from a sum-of-the-parts (SOTP) valuation approach based on the following assumptions: 1) For petrochemicals and Farm Hannong, we apply a target multiple of 8.0x (Korean market average) to 24-month forward normalised EBITDA of cKRW3.3trn. 2) For LG Energy Solution, we apply a targe

627、t multiple of 15.7x, which is +1SD above the average of the 24-month forward normalised EV/EBITDA multiple of regional battery peers to 36-month forward normalised EBITDA of cKRW3.3trn. 3) For Advanced Materials, we apply a target multiple of 8.0x (Korea market average) to 24-month forward normalise

628、d EBITDA of KRW515bn 4) For Life Science, we apply a target multiple of 12.5x (domestic peer companies average given a similar long-term growth profile) to 24-month forward normalised EBITDA of KRW177bn. After adjusting for net debt and preferred equity value, we arrive at our TP of KRW1,060k unchan

629、ged, which implies 28.5% upside from the current market price. We have a Buy rating on LGC on the improving business outlook. Please refer to the SOTP details in the next section. Downside risks include: accelerated in-house production of batteries by automobile OEMs; customer concentration; changes

630、 in battery technology; Increased competition in the battery industry; disruptions in access to and/or increases in prices of battery raw materials; potential fire incidents with battery products; cost of external financing (including potential public listings of subsidiaries such as LGES); uncertai

631、n royalties regarding US trade/legal disputes; unexpected commissioning issue with the Yeosu #2 naphtha cracker; and unfavourable changes in S/D balances of key chemical products. Buy Thomas C. Hilboldt*, CFA | .hk | +852 2822 2922 Formosa Plastics 1301TT Current price: TWD103.00 Target price: TWD 1

632、26.00 Up/downside: +22.3% Our target price of TWD126 is based on our DCF model. Our key DCF assumptions include a risk-free rate of 2.5%, market risk premium of 3.5%, beta of 0.89, cost of equity of 5.6%, a WACC of 5.0% and a terminal growth rate of 2%. Our target price of TWD126 translates to a 2.3

633、x 2021e PB, which is in between FPCs trough level PB of 1.0x and peak level of 2.9x. Our target price implies 22.3% upside to the current price, and we have a Buy rating on the stock. We are positive on its growth outlook in 2021, which we expect will be boosted by strength in Polyvinyl Chloride (PV

634、C), ethylene-vinyl acetate (EVA), and polypropylene (PP) spreads as well as the equity investment income from FPC USA and FPCC. Downside risks: 1) lower-than-expected crude oil price; 2) weaker-than-expected polyolefin and vinyl chain product spreads; 3) unexpected operational issues causing a prolo

635、nged shutdown of operations; and 4) a delay in the ramp-up of new capacity in the US. Buy Evelyn Yu* | .tw | +886 2 6631 2867 69 Multi-Asset Emerging Markets June 2021 Valuation Risks PTT PTT TB Current price: THB41.50 Target price: THB52.25 Up/downside: +25.9% We apply a target PB multiple of 1.41x

636、 to our 2022e BVPS of THB37.1; this is +0.5SD above the three-year average 12-month forward PB multiple of 1.31x. The PB premium reflects a more limited-than-expected valuation expansion. This leaves sufficient upside to justify a positive investment opinion, in our view. Our TP of THB52.25 implies

637、25.9% upside compared to the current market price and we rate the stock Buy. As the global economic recovery continues, we believe the companys positive earnings trajectory will attract incremental investment flows. Potential catalysts: Solid earnings recovery driven by the recovery in crude prices

638、and downstream margins; contributions from other segments such as the recently listed retail business; successful divestiture of the coal business. Downside risks: Larger-than-expected impairment expenses; slower-than-expected economy recovery; demand destruction/weakness related to COVID-19; operat

639、ional failures; THB weakness; negative market sentiment related to Thailand lockdowns; higher-than-expected global crude oil output; project delays; and reduction/elimination of hydrocarbon investments from institutional portfolios. Buy Thomas C. Hilboldt*, CFA | .hk | +852 2822 2922 Grupo Mexico GM

640、EXICOB MM Current price: MXN96.86 Target price: MXN120.00 Up/downside: +23.9% We use a sum-of the parts (SOTP) approach to set our target price of MXN120.00, valuing the companys stakes in Southern Copper and GMXT (Grupo Mexico Transportes, GMXT* MM, Buy, CMP 33.36, TP MXN39.50) at our target prices

641、 and using target multiples to value Asarco and the energy assets (assuming 8x EV/EBITDA for both, which are based on sector average multiples). We apply a holding company discount of 20%. Our target price implies 23.9% upside from current levels. We have a Buy rating on Grupo Mexico on the back of

642、the quality of its copper assets and significant discount to NAV. Please refer SOTP details in next section. Downside risks include: 1) Lower-than-expected copper prices, which would have a material impact on both the value of the companys stake in Southern Copper, as well as decrease cash flows fro

643、m the companys Asarco copper assets; 2) regulatory issues such as higher royalties and taxes, and higher cross-border tariffs, which could impose higher costs on the company and thereby reduce profitability; 3) project delays due to environmental concerns; 4) slower recovery of the Mexican economy,

644、which could reduce demand for imports and thereby reduce volumes shipped into Mexico; 5) weaker auto exports to the US, which could reduce volumes of final products exported from Mexico, along with raw materials imported into the country; 6) production might be impacted in case of shutdowns due to t

645、he pandemic; and 7) strengthening of MXN and PEN against USD. Buy Jonathan Brandt, CFA | | +1 212 525 4499 Southern Copper SCCO US Current price: USD71.67 Target price: USD67.00 Up/downside: -6.5% Our target price of USD67.00 is based on DCF methodology, assuming an average WACC of 7.6% in USD term

646、s, with a risk-free rate of 2.5%, an equity risk premium of 5.5%, a weighted average country risk premium of 0.67%, an unlevered industry beta of 0.86 and 3.0% long-term growth rate. Our target price implies 6.5% downside and we have a Reduce rating as we believe Southern Copper is expensive compare

647、d to its peers. Upside risks include a longer-than-expected period of increasing copper prices; better-than expected production and cost controls; earlier approval and ramp-up of the Tia Maria project; and increased USD strength relative to MXN and PEN. Reduce Jonathan Brandt, CFA | | +1 212 525 44

648、99 Vale Vale US Current price: USD22.20 Target price: USD25.00 Up/downside: +12.6% Our DCF-based target price for the ADRs of USD25.00 is based on a 10-year DCF model, and we assume a WACC of 9.2% in USD terms, which is based on a risk-free rate of 2.5%, an equity risk premium of 5.5%, a weighted av

649、erage country risk premium of 1.0%, and unlevered beta of 1.05. We also assume a long-term growth rate of 3.0%. Our target price includes an assumed USD6.9bn liability from the Brumadinho incident (in line with the disclosures provided in the 4Q20 results), and a USD2.1bn liability for the Samarco d

650、am decharacterization and Renova foundation (in line with disclosures provided in the 4Q20 results). Our target price for the VALE ADR implies 12.6% upside from current levels. We have a Buy rating on Vale, noting its strong free cash flow, positive steps towards a broad-based Brumadinho agreement,

651、and potential for re-rating. Our target price for VALE3 BZ (CMP BRL113.20) is BRL128.80, which is derived from our Vale ADR target price multiplied by HSBCs FX teams 2021 year-end BRL FX assumption of 5.15. Downside risks include larger-than-expected environmental or socioeconomic remediation expens

652、es due to the Brumadinho dam collapse; appreciation of the BRL, which would lead to cost increases (denominated in BRL); and the reflection in our cash flow forecasts of HSBCs Metal & Mining teams estimates for several commodities (including iron ore, nickel, copper, and coal, among others), though

653、prices are sensitive to ever-changing demand conditions in mainland China and the global supply demand balance. Buy Jonathan Brandt, CFA | | +1 212 525 4499 Multi-Asset Emerging Markets June 2021 70 Valuation Risks Gerdau GGBR4 BZ Current price: BRL34.12 Target price: BRL42.25 Up/downside: +23.8% O

654、ur DCF-based target price for GGBR4 is BRL42.25 based on a WACC of 10.7%, assuming a risk-free rate of 2.5%, equity risk premium of 5.5%, weighted average country risk premium of 1.9%, and unlevered industry beta of 0.88. We assume a 5.0% long-term growth rate. Our target price of BRL42.25 implies 2

655、3.8% upside. We rate Gerdau Buy as we believe that the potential US infrastructure spending and improvement in Brazilian demand will increase profitability. Downside risks include: Potential deterioration of the US economy; demand retraction for long steel in Brazil; recurrent corporate governance i

656、ssues; potential higher CARF and operation Zelotes-related liabilities; heightened risks associated with Argentinas political scenario; and elimination of the interest on capital (IOC) payment tax benefit Buy Jonathan Brandt, CFA | | +1 212 525 4499 Impala Platinum IMP SJ Current price: ZAR247.15 T

657、arget price: ZAR379.00 Up/downside: +53.3% We derive our target price using an equally weighted target EV/EBITDA (5.1x) in combination with our base case DCF valuation at a 17.2% nominal discount rate. The EV/EBITDA multiple is applied to our 2-year average real-term EBITDA estimates for FY21-22e. W

658、e derive a target price of ZAR379, which implies 53.3% upside from current levels; we have a Buy rating on the stock. Impala Canada provides Implats exposure to palladium-dominant assets not commonly found in South Africa. Also, geographical diversification reduces the risk to financial performance

659、due to disruptions in a specific region. Expansion at Zimplats and Two Rivers are value accretive and has low execution risk. The company offers compelling FCF and dividend yields. Impalas portfolio should de-risk over the medium term with an increased contribution of mechanised production. Downside

660、 risks: A stronger-than-expected exchange rate or weaker PGM prices than our forecast. Execution risks associated with the proposed restructuring at Rustenburg are also likely to weigh on investor sentiment over the short to medium term. Recent changes in the political and regulatory environment in

661、Zimbabwe have lowered the risk of reduced attributable ownership in Zimbabwe, in our view. Buy Leroy Mnguni* | | +27 11 676 4224 Northam NHM SJ Current price: ZAR228.38 Target price: ZAR311.00 Up/downside: +36.2% We derive our target price using equally weighted - target EV/EBITDA (6.4x) multiple i

662、n combination with our base case DCF valuation at a 17.5% nominal discount rate. The EV/EBITDA multiple is applied to our average 2-year real-term EBITDA estimates in FY21-22e. We calculate a target price of ZAR311share which implies upside of 36.2% from the current share price. We have a Buy rating

663、 on Northam. Northam has a sector-leading growth profile which we expect should result in accelerated FCF growth. We expect the group to focus on project execution and ramp-up, which should lead to an industry leading free-cash yield in the medium-term. Downside risks include a stronger-than expecte

664、d exchange rate or a slower-than expected recovery in PGM prices and weaker-than-expected production growth from the Booysendal properties. Weaker than expected earnings could limit the reduction of the Zambezi financing consideration and increase the residual liability guaranteed by Northam Buy Ler

665、oy Mnguni* | | +27 11 676 4224 BSF BSFR AB Current price: SAR36.80 Target price: SAR34.70 Up/Downside: -5.7% We derive our fair value target price for Saudi Banks using a residual income methodology comprising three stages. For Saudi banks, we use an inflation differential model to calculate the co

666、st of equity. We assume the cost of equity to be the sum of the US risk-free rate (2.5%) and the inflation differential between the country and the US (0%), plus the equity risk premium (7.5%) multiplied by the stock beta of 0.9. We use a cost of equity of 9.3% for Saudi banks. Our target price impl

667、ies 5.7% downside. We rate the stock Hold as we expect BSF to be a major beneficiary of mortgage price wars when switching costs fall. Normalisation in cost of risk at a lower level is a near-term positive earnings catalyst. Upside risks: Better-than-expected growth in the retail portfolio and stron

668、ger securities growth could provide additional support for NII in a declining interest rate environment. Improvement in asset yields as a result of higher share of retail loans resulting in higher-than expected NIM is another upside risk. Downside risks: Higher-than-expected increase in Stage 2 & 3

669、loan ratio resulting in stronger than expected increase in cost of risk. Higher-than-expected decline in NIMs resulting in lower than expected NII growth. Hold Aybek Islamov* | | +971 4 423 6921 71 Multi-Asset Emerging Markets June 2021 Valuation Risks Saudi National Bank SNB AB Current price: SAR5

670、3.20 Target price: SAR47.20 Up/Downside: -11.3% We derive our fair value target price for Saudi Banks using a residual income methodology comprising three stages. For Saudi banks, we use an inflation differential model to calculate the cost of equity. We assume the cost of equity to be the sum of th

671、e US risk-free rate (2.5%) and the inflation differential between the country and the US (0%), plus the equity risk premium (7.5%) multiplied by the stock beta of 0.9. We use a cost of equity of 9.3% for Saudi banks. Our target price implies 11.3% downside. We have a Hold rating on the stock as we e

672、stimate SNBs EPS growth can recover to 16% in 2022 from -4% in 2021 as company books 60% of integration costs this year. Upside risks: Stronger-than-expected loan and securities growth could result in better NII. Lower-than-expected cost of risk could drive stronger EPS growth. Better-than-expected

673、performance at the Turkish subsidiary and higher than expected synergies from the merger with Samba are key upside risks. Downside risk centres on reduction in government support of loan under payment holidays and emergence of credit risk events on SME loans. Hold Aybek Islamov* | | +971 4 423 6921

674、 Almarai ALMARAI AB Current price: SAR55.30 Target price: SAR58.0 Up/downside: +4.9% In our DCF model, we assume a WACC of 8.4% derived from our assumptions of a cost of equity of 9.7%, equity risk premium of 7.5%, risk-free rate of 2.5% based on the global risk-free rate, cost of debt of 5.5%, beta

675、 of 0.95 and debt equity ratio of 30:70. Our DCF generates a fair value target price of SAR58, implying upside of 4.9%. We have a Hold rating on the stock. Downside risks include: Potential removal of all subsidies from the government to dairy producers could lead to pressure on Almarais margins. We

676、 also see the potential risk of a drop in the long-life milk price which would negatively impact the group. Slower-than-expected market share gains compared to our estimates in baked good categories could have a negative impact on our valuation. Upside risks include: Improving consumption levels in

677、Saudi from potential easing of the expat exodus. Potential gains from opening of trade between Qatar and Saudi. Stronger than expected revenue growth in the near term driven by market share gains. We also see potential upside risk from implementation of the Shareek program which could lead to expans

678、ion into new verticals by Almarai and incremental demand driven by more Saudi nationals getting jobs. Hold Raj Sinha* | | +971 4423 6932 Extra EXTRA AB Current price: SAR123.40 Target price: SAR134.00 Up/downside: +8.6% We continue to value Extras core business using a DCF, and the consumer finance

679、 business using a residual income valuation method. For our DCF-based valuation we use a WACC of 9.62% based on a local risk-free rate of 2.5%, cost of debt of 5.5%, equity risk premium of 7.5%, beta of 1.01, COE of 10.1% and D/V of 10%. For the residual income based valuation, we use a CoE of 10.1%

680、 and a terminal growth rate of 2.5%. Our target price of SAR134, implies 8.6% upside and we rate the stock Buy as we continue to be positive on Extra after exceptional 1Q 2021 results that confirmed continued strength of the franchise and the sharp ramp up in consumer finance profitability. Downside

681、 risks include: (1) Any deviation versus our forecast owing to changing product mix and/or adverse pricing environment; (2) slower-than-expected ramp up or higher-than-expected provisions in the consumer finance business (3) Resumption of international travel by Saudis affecting the sale of discreti

682、onary categories including electronics. Buy Ankur Agarwal*, CFA | | +971 4423 6558 Banco do Brasil BBAS3 BZ Current price: BRL33.98 Target price: BRL52.00 Up/downside: +53.0% We derive our fair value target price for Banco do Brasil by using a blended valuation approach of a dividend discount model

683、 (DDM, 50%, BRL62.0 per share), economic profit model (EPM, 30%, BRL44.1), and implied PE (20%, BRL41.2). We calculate the implied 2021e PE of 6.5x based on the formula (ROE-g)/ROE*(k-g), in which 2021e ROE is 13.8%. For our valuations, we assume a risk-free rate of 2.5%, inflation differential with

684、 the US of 2.3%, beta of 1.4 and equity risk premium of 6.5%. This results in a cost of equity of 14.8%. We also assume a long-term growth rate of 5.8%. (All assumptions unchanged.) Our target price of BRL52.00, implies upside of 53.0% from the current share price. We have a Buy rating on the stock,

685、 as we believe an upturn in Brazils economy would benefit the stock more vs private peers. Downside risks include: The high beta makes the stock more sensitive to market volatility; a greater-than-expected deterioration in asset quality, especially in the SME and auto segments, leading to higher pro

686、vision expenses, which we view as the main investment risk; Previs surplus becoming a deficit and indirectly exposing the bank to iron ore prices (Previs largest holding is a mining company); and the potential influence of the main shareholder reflecting wider priorities over maximizing shareholder

687、value. Buy Carlos Gomez Lopez | | +1 212 525 5253 Multi-Asset Emerging Markets June 2021 72 Valuation Risks Itau Unibanco ITUB4 BZ Current price: BRL30.60 Target price: BRL36.00 Up/downside: +17.6% We value Itau Unibanco using a blended valuation approach based on our dividend discount model (DDM,

688、50%, BRL35.1 per share), economic profit model (EPM, 30%, BRL25.4), implied PE (20%, BRL26.6) and by adding the value of segregated NewCo BRL5.5 (all unchanged). We calculate the implied 2021e PE of 10.5x based on the formula (ROE-g)/ROE*(k-g) in which 2021e ROE is 17.3%. We calculate the value of N

689、ewCo of BRL5.5 by using the market capitalization of XP (XP US, CMP USD39.50, Buy) as at 13 May 2021 at a price of USD41.09 * 41.05% stake distributed by Itau. For our Itau valuation, we assume a risk-free rate of 2.5%, inflation differential with the US of 2.3%, beta of 1.1, and equity risk premium

690、 of 6.5%. Thus, we arrive at a market rate of return of 11.3% and cost of equity of 12.1%. We also assume a long-term growth rate of 5.8%. We arrive at Itaus standalone (excluding value of NewCo) fair value of BRL30.Our combined target price remains unchanged at BRL36.00, which implies upside of 17.

691、6%. We have a Buy rating on the stock as the value of Itaus stake in XP represents c13% of the market capitalization of the bank, and we believe a distribution to shareholders offers the potential to unlock substantial value for shareholders. Our TP for Itau Unibancos ADR (ITUB US, USD5.90) of USD 7

692、.60 is based on our year-end 2021e exchange rate forecast of BRL4.75/USD for 2021e and a ratio of 1:1. Downside risks include: Higher-than-expected NPL formation, which would be detrimental to earnings and asset quality; net interest margins and spreads coming under greater pressure than expected; h

693、igher-than-expected operating costs and costs of integration of CorpBanca; larger presence abroad could be a drag on earnings due to currency volatility. Buy Carlos Gomez Lopez | | +1 212 525 5253 CCR CCRO3 BZ Current price: BRL13.94 Target price: BRL21.50 Up/downside: +54.2% Our sum-of-the-parts (

694、SOTP)-calculated target price of BRL21.50 includes an evaluation of the continuing business and future concessions. We use a DCF model to value the continuing business and assume a 12% WACC, derived from a 2.5% risk-free rate, a 0.7 unlevered beta, a 2.0% inflation differential, and a 6.5% market ri

695、sk premium. We also assume 4.5% terminal growth rate. This gives a valuation of BRL44,563m. We also include the value of future concessions and rebalances. We calculate the NPV assuming that CCR wins 35% of all future concessions, a discount rate of 4.5% in real terms, and an IRR of 10% for roads, 9

696、% for airports, and 11% for urban mobility. We believe CCR will likely be successful in being awarded 35% of future concessions because of its track record of winning concessions and changes in the current competitive environment. This gives a valuation of BRL16,189m, for a combined enterprise value

697、 of BRL60,753m. The combination of the two valuations results in our target price of BRL21.50, which implies 54.2% upside from the current share price. We have a Buy rating, given the pipeline of investment opportunities over the next few years. Please refer to the SOTP details in the next section.

698、Downside risks : 1) Claims against the company and its executives; 2) noise or delays from unfavourable changes in regulation and/or in concession contracts with a negative impact on concessionaires; 3) government not delivering on contract rebalances or concession pipeline; 4) toll road companies b

699、ear investment-related risks; 5) increased presence in foreign corporations within highway concessions; 6) inability to issue debt in the near term, resulting in not being able to bid for future concessions. Buy Santhosh Seshadri*, CFA | santhosh.seshadrihsbc.co.in | +91 80 4555 2758 73 Multi-Asset

700、Emerging Markets June 2021 Valuation Risks MercadoLibre MELI US Current price: USD1368.87 Target price: USD1,950.00 Up/downside: +42.5% We value MercadoLibre stock using a DCF methodology (FCFE). Our DCF model is based on two stages with an explicit period of 10 years and a stabilization period of 1

701、0 years until converging with our forecast terminal growth rate. We assume a risk-free rate of 2.5%, equity risk premium of 5.5%, weighted average country risk rate of 2.8% and unlevered beta of 1 (based on the average of global ecommerce companies) to arrive at our cost of equity assumption of 11%.

702、 Our terminal growth rate assumption is 4.5%, based on a 2.5% real growth rate and a 2% long-term inflation rate. Based on its long-term, leading e-commerce market share, steady-state 5.0% EBIT/GMV, MercadoPagos user base of 115m (vs. 140m previously; lower number of users but more engaged), and rev

703、enue opportunities, we derive our target price of USD1,950. Our target price implies 42.5% upside. We have a Buy rating given our expectations for strong momentum for the ecommerce and Fintech businesses in a post-COVID-19 world and the gradual build-up of first-party revenue. Downside risks: 1) Wea

704、ker overall demand and lower-than-expected shift to online purchases as a result of the COVID-19 pandemic; 2) Amazons aggressive push into Brazil, which could entail high cash burn over an extended period to defend share (as in Mexico); 3) execution missteps in Fintech, such as higher credit risk th

705、an would be prudent or increased spend on initiatives that do not scale as consumer preferences change (or remain cash heavy); 4) a global risk off environment leading to less patience from investors with respect to the trade-off between short-term cash flow generation and growth; 5) continued depen

706、dence on national post office services (Correios) coupled with a lack of quality in deliveries, ultimately leading to lower GMV growth; 6) errors or system crashes could interrupt ecommerce websites, impacting short-term revenues and causing reputational harm, and affecting longer-term growth rates;

707、 and 7) the fact that ecommerce and Fintech are highly regulated with any changes in policy affecting both growth and profitability. Buy Ravi Jain | | +1 212 525 3442 Magazine Luiza MGLU3 BZ Current price: BRL20.35 Target price: BRL26.00 Up/downside: +27.8% We value Magazine Luiza using a sum-of-th

708、e-parts approach in which we value the core business using a DCF methodology (FCFE) and the payments and TaaS business of Magazine Luiza on relative valuation multiples. Our DCF model for the core business is based on two stages with an explicit period of 10 years and a stabilization period of 10 ye

709、ars until converging with our terminal growth forecast. We continue to assume a risk-free rate of 2.5%, equity risk premium plus country risk 6.5% (in line with HSBCs view of Brazils cost of equity). To that, we make an adjustment of 150bp related to our methodology, which is based on unlevered beta

710、 of 0.94 (0.8 for brick-and-mortar retail and 1 for ecommerce computed from the global retail and e-commerce companies, largely DM, and an implied ERP of the S&P500 for the past 25 years and then adjusted to the EM country level). Finally, we then add the inflation differential between Brazil and th

711、e US. Using these assumptions, we derive our cost of equity assumption of 12.2% (average for the next three years), similar to a steady state cost of equity of 12.2%. Our terminal growth assumption is 6.5%. Based on our revised estimates and cost of capital assumption, we arrive at a fair value of B

712、RL20 per share for Magazine Luizas core business. We value Magazine Luizas payments business at USD2.4bn vs. USD4bn earlier, using a top-down LatAm market model based on 33m (vs. 45-50m users; lower number of users but highly engaged) and 12m highly engaged users in 10 years, 15% TPV share, EBITDA/M

713、AU of USD9 and 20x EV/EBITDA discounted back to present value. This renders a fair value of BRL2.00. We value the MaaS business at USD4bn, assuming 1m merchants and USD25k GMV per merchant by 2025e. This renders a fair value of BRL3.5 per share. Summing the separate fair values, we set our target pr

714、ice at BRL26, implying 27.8% upside. We have a Buy rating as we see an increasing likelihood of strong value creation in payments and TaaS. Downside risks: 1) Weaker-than-expected demand as a result of the COVID-19 pandemic; 2) the company could face fiercer competitive environments for both its 1P

715、and 3P businesses; 3) on top of the first-party business, the company might not have the necessary bargaining power to match lower prices, leading to higher markdowns and lower margins in the core business; 4) Magazine Luiza could also face a fiercer competitive environment in the offline space due

716、to aggressive pricing, lack of differentiated pricing from manufacturers as well as faster and stronger ecommerce penetration; 5) altogether, Magazine Luiza could be negatively impacted on its GMV growth potential; and 6) the company is subject to delinquency rates from marketplace sellers, which co

717、uld lead to brand damage and negatively impact financial products. Buy Ravi Jain | | +1 212 525 3442 Multi-Asset Emerging Markets June 2021 74 Valuation Risks Lojas Americanas LAME4 BZ Current price: BRL21.40 Target price: BRL29.00 Up/downside: +35.5% We have now accounted for the proposed merger o

718、f B2W and Lojas Americanas brick and mortar business including the expected issuance of an additional 339m shares at B2W. We have incorporated the merger mechanics ahead of the EGM to be held on 10 June 2021 as we believe that approval is highly likely. The value of Lojas Americanas will be composed

719、 of two parts (once the merger is executed). First, we value Lojas Americanas 39% stake in B2W (to be renamed Americanas SA) at HSBCs revised target price of BRL85.50. Then we assign a 15% holding company discount. Second, as shareholders of Lojas will get 339m additional B2W shares, we value them a

720、t B2Ws HSBC target price of BRL85.50. Thus, we arrive at a target price of BRL29, implying 35.5% upside and we rate the stock Buy. Downside risks: 1) Weaker-than-expected demand as a result of impact of the COVID-19 pandemic; 2) continued cash burn and increasing risk of an additional capital increa

721、se; 3) slower than-expected penetration of marketplace within total GMV could lead to slower-than-expected gross margin expansion; 4) a more aggressive and quicker entry from global players into Latin America could hurt the companys growth potential and consequently lead to cash burn; 5) weaker infr

722、astructure in the region could affect adoption curves and lead to slower ecommerce growth in LatAm; and 6) errors or system crashes could cause interruption in its ecommerce websites, impacting short-term revenues and causing reputational harm affecting longer term growth rates; 7) any other investm

723、ent outside B2W. Buy Ravi Jain | | +1 212 525 3442 B2W BTOW3 BZ Current price: BRL63.66 Target price: BRL85.50 Up/downside: +34.3% As noted in Lojas Americanas valuation above, we have now accounted for the proposed merger of B2W and Lojas Americanas brick-and-mortar business including the issue of

724、 an additional 339m shares at B2W. We value B2W Digital using a sum-of-the-parts approach in which we value the core business using a DCF methodology (FCFE) and the payments business using our LatAm market model for the consumer wallet. Our DCF model is based on two stages with an explicit period of

725、 10 years and a stabilization period of 10 years until converging with our long-term growth forecast. We assume a risk free rate of 2.5% and equity risk premium of 6.5% (reflecting HSBCs view of Brazil cost of equity). To that, we make an adjustment of 150bp related to our methodology, which is base

726、d on an unlevered beta of 1 computed from the global e-commerce companies, largely DM, and an implied equity risk premium of the S&P500 for the past 25 years and then adjusted to the emerging market country level. Finally, we add the inflation differential between Brazil and the US (200bps). Using t

727、hese assumptions, we derive our cost of equity assumption of 13.5% (average for the next three years), converging to a steady-state cost of equity of 13.3%. Our terminal growth assumption is at 6.5% (based on 2.5% real growth and 4% long-term inflation). Based on our estimates and the cost of capita

728、l assumptions detailed above, we arrive at our fair value target price of BRL72 per share for the core commerce business. We value Ame at BRL13.50 using our LatAm market model for the consumer wallet (assuming 33m MAUs from 45-50m earlier and 12m engaged credit users; we assume a lower number of use

729、rs but highly engaged ones) in 10 years, 15% TPV share, EBITDA/MAU of USD8 and 20x LTM EV/EBITDA (given strong ROIC and growth even after the initial user penetration; 25x earlier) discounted back to the present value. Adding the two, we get to our target price of BRL85.50. This implies upside of 34

730、.3%. We have a Buy rating. Downside risks: 1) Weaker-than-expected demand as a result of impact of the COVID-19 pandemic; 2) continued cash burn and increasing risk of an additional capital increase; 3) slower than-expected penetration of marketplace within total GMV could lead to slower-than expect

731、ed gross margin expansion; 4) a more aggressive and quicker entry from global players into Latin America could hurt the companys growth potential and consequently lead to cash burn; 5) weaker infrastructure in the region could affect adoption curves and lead to slower ecommerce growth in LatAm; and

732、6) errors or system crashes could cause interruption in its ecommerce websites, impacting short-term revenues and causing reputational harm affecting longer-term growth rates. Buy Ravi Jain | | +1 212 525 3442 75 Multi-Asset Emerging Markets June 2021 Valuation Risks SABESP SBSP3 BZ SBS US Current

733、price: BRL38.80 USD7.57 Target price: BRL62.00 USD11.50 Up/downside: +59.8% / +51.9 Our BRL62 target price is based on a DCF valuation and implies 59.8% upside. We have a Buy rating. We assume a cost of equity 7.5% in real BRL terms derived from a risk free rate of 2.5%, country risk premium of 3.0%

734、, equity risk premium of 5%, and levered beta of 0.72x (all unchanged). Our target price for the SABESP ADR is USD11.50 with rounding, based on the ADR ratio of 1:1 and a BRL5.40/USD FX rate. With 51.9% upside we have a Buy rating on the ADR. At our target price, the stock would trade at c1.1x EV/cu

735、rrent RAB (i.e., the one blessed by the regulator) and 2021-22e valuation multiples of 7.5-6.9x EV/EBITDA and 13-12x PE, with a 1.8-1.9% dividend yield estimate (25% payout assumption). Downside risks include: 1) significant deterioration in Brazils macroeconomic outlook, including lower growth, ris

736、ing interest rates locally, and a weaker BRL; 2) negative changes to the preliminary rate review proposal or tariff structure; 3) opex pressure, lower-than-expected sales volume growth, higher delinquency rates, and drier-than anticipated weather; 4) continued hunt by the parent for a strategic shar

737、eholder at the holdco level of SABESP, and one with a suboptimal reputation; 5) pursuit of expansion projects at suboptimal returns (watch for upcoming awards of new concessions by several state governments, set for 2021e and onwards, including CEDAE) Buy / Buy Lilyanna Yang, CFA | L | +1 212 525 09

738、90 FirstRand FSR SJ Current price: ZAR56.76 Target price: ZAR68.00 Up/downside: +19.8% The sustainable ROE methodology involves forecasting NAV per share and calculating a sustainable ROE. We divide this sustainable ROE (19.7%) by our calculation of the banks COE (12.5%) to arrive at a suggested mul

739、tiple to book. Our calculated COE is a function of our assessment of the risk inherent in the company. We multiply this suggested multiple to book with our forecast NAV per share (ZAR34.45) at the end of Year 3 to arrive at a value per share at the end of Year 3. We use the companys COE to present v

740、alue this value per share at the end of Year 3 as well as all the dividends that will be paid in the intermittent period. The result of the calculation constitutes our target price. Our revised TP implies upside of 19.8% from current levels, and we rate the share Buy as FirstRand is well provided an

741、d has taken a more cautious approach to lending than its peers given the challenging South African macros. Downside risks: FNBs client gains stop and/or it runs out of road to cross-sell more products to existing clients. The Aldermore acquisition proves value-destructive. Large and/or rapid increas

742、es in interest rates. Intense competition on price between the banks that eventually erodes returns to levels that are below our expectations. Infighting between the factions in the ANC stymie reforms. The risk of further sovereign downgrades for South Africa, which would exert significant pressure

743、on banks margins and bad debts. Buy Henry Hall* | | +27 11 880 1855 Standard Bank SBK SJ Current price: ZAR135.38 Target price: ZAR159.00 Up/downside: +17.4% The sustainable ROE methodology involves forecasting NAV per share and calculating a sustainable ROE. We divide this sustainable ROE (15.7%)

744、by our calculation of the banks COE (13.7%) to arrive at a suggested multiple to book. Our calculated COE is a function of our assessment of the risk inherent in the company. We multiply this suggested multiple to book with our forecast NAV per share (ZAR147.55) at the end of Year 3 to arrive at a v

745、alue per share at the end of Year 3. We use the companys COE to present value this value per share at the end of Year 3 as well as all the dividends that will be paid in the intermittent period. The result of the calculation constitutes our target price. Our revised TP implies upside of 17.4% from c

746、urrent levels, and we rate the share as Buy as we think our forecast strong earnings growth, combined with our forecast increase in payout ratio to 52% in 2023e, will support further share price appreciation. Downside risks: FNBs client gains stop and/or it runs out of road to cross-sell more produc

747、ts to existing clients. The Aldermore acquisition proves value-destructive. Large and/or rapid increases in interest rates. Intense competition on price between the banks that eventually erodes returns to levels that are below our expectations. Infighting between the factions in the ANC stymie refor

748、ms. The risk of further sovereign downgrades for South Africa, which would exert significant pressure on banks margins and bad debts. Buy Henry Hall* | | +27 11 880 1855 Shoprite SHP SJ Current price: ZAR156.03 Target price: ZAR180.00 Up/downside: +15.4% Our target price is derived using an equally

749、-weighted average of the following valuation methodologies: 1. PE: Incorporates a 10-year historical average 12-month forward PE of 18.4x multiplied by our FY21 earnings forecast: ZAR184.69 2. PE relative to the FTSE South Africa: Long-term historical average PER of 1.4x applied to the FTSE 12M forw

750、ard PE of 12x (a 5% discount to the post-GFC average) for South Africa: ZAR174.40 The average of these valuation methodologies is ZAR179.54, which we round to ZAR180 as our target price. This implies 15.4% upside and we have a Buy rating, as we believe that with further price investment, SHP could p

751、ut significant pressure on its competitors and cement its leadership position. In addition, the increased focus on capital allocation and cash generation looks set to drive improved shareholder returns. Downside risks: Weaker-than-expected top-line growth driven by a weaker macro outlook than we hav

752、e assumed; a strong recovery of Pick n Pay; further currency weakness and weaker GDP growth in Africa than we have assumed. Pressure on supply chain and increased costs associated with COVID-19. Buy Nick Webster* | | +27 11 676 4537 Multi-Asset Emerging Markets June 2021 76 Valuation Risks Mr Price

753、 MRP SJ Current price: ZAR233.02 Target price: ZAR236.00 Up/downside: +1.3% We derive our target price using an equally weighted average of the following valuation methodologies: 1) PE: Incorporates the long-term historical average 12-month forward PE of 17x, multiplied by our FY22e earnings forecas

754、t: ZAR246.00. 2) PER to the FTSE South Africa: Incorporates a 10% premium to the long-term historical average PER of 1.3x to reflect its above market top-line growth and strong value-based positioning, applied to the FTSE 12-month forward PE of 12x (a 5% discount to the post-GFC average) for South A

755、frica: ZAR225.74 The average of these valuation methodologies is ZAR235.87, which we round up to a TP of ZAR236. Our target price implies 1.3% upside and we have a Hold rating on the stock. Upside risks: Stronger-than-expected top-line growth as a result of better-than-forecast macro outlook or a le

756、ss detrimental impact from COVID-19 than we have assumed. A recovery in the ZAR, which would ease input cost pressures; and greater cost control than we have modelled. An improvement in the credit outlook and higher interest rates than we forecast, resulting in lower debtor costs and higher credit i

757、ncome. Downside risks: Slower-than-expected top-line growth as a result of a weaker-than-forecast macro outlook, merchandising issues or further lockdowns of non-essential categories as a result of COVID-19. Supply issues as a result of the groups move to factory-direct sourcing. Rand depreciation c

758、ould place pressure on input costs; and a deterioration in the credit outlook, could result in higher debtor costs than we have modelled. Hold Nick Webster* | | +27 11 676 4537 Netcare NTC SJ Current price: ZAR15.50 Target price: ZAR16.50 Up/downside: +6.5% We use a DCF methodology to value Netcare

759、. Our DCF calculation leads to our fair value target price of ZAR16.50. We assume a WACC of 11.6%, beta of 1.0 and terminal growth rate of 3.0% (all unchanged). Our WACC is based on our assumptions of a risk-free rate for SA of 8.0%, derived from the average 10-year bond yield in SA for the past six

760、 months; equity risk premium of 5.5%; cost of debt of 7.0%; and debt to equity ratio of 3:7. Our target price of ZAR16.50 implies 6.5% upside. We have a Buy rating on NTC considering its combination of inexpensive valuations, strong balance sheet and our expectation of strong FCF for the group in th

761、e medium term. Downside risks include: Unfavourable recommendations from the Competition Commission in South Africa resulting from the ongoing investigation into hospital operators in the country; limited availability of skilled healthcare professionals; and decreasing healthcare affordability. Buy

762、Raj Sinha* | | +971 4 423 6932 Bidvest BVT SJ Current price: ZAR196.07 Target price: ZAR220.00 Up/downside: +12.2% We use our FY22e estimates and derive a target price of ZAR220, implying 12.2% upside. We have a Buy rating due to positive earnings support from a combination of acquisitions (PHS, Fu

763、ture Cleaning, New Frontiers, Axis), a strong Services division, margin improvements from cost saving initiatives, and strong FCF generation. We use an equally weighted average of two different methodologies: 1) PE relative to the FTSE South Africa we apply a 25% premium to the FTSE 12-month forward

764、 PE of 11.2x. This gives us a fair value of ZAR238. 2) A PE-based sum-of-the-parts approach using the closest listed global and domestic peers for each division (ZAR202). We apply a 10% conglomerate discount to reflect the diverse nature of Bidvests operations across multiple industry segments. Plea

765、se refer SOTP details in next section. Downside risks: (1) Further weakness in the domestic economy leading to weaker revenue and earnings growth. (2) A volatile rand could negatively impact margins in its import and distribution operations accounting for c15-20% of the business. (3) COVID-19 impact

766、 in South Africa is uncertain at this point in time and could lead to wider negative economic implications, adversely affecting the businesses. Buy Nick Webster* | | +27 11 676 4537 Priced at 01 June 2021 *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified

767、 pursuant to FINRA regulations Source: HSBC estimates 77 Multi-Asset Emerging Markets June 2021 SOTP (Sum of the parts valuations) Weichai Power: Sum-of-the-parts valuation SOTP H-share (HKD) A-share (RMB) Methodology Weichai core 16.0 13.6 DCF (WACC of 7.6%) KION 6.7 5.6 Based on Bloomberg consensu

768、s target price Total 22.7 19.2 Source: Bloomberg, HSBC estimates Weichai Power: DCF core business assumptions DCF assumptions (%) Core business value (RMB m) Risk-free rate 2.5% NPV 20,813 Equity risk premium 5.0% PV of terminal value 14,339 Cost of debt 5.5% Total NPV of the core business 35,152 Be

769、ta 1.1 Net debt 72,633 Cost of equity 8.1% Equity value 107,785 Terminal growth 3.0% No. of shares (m) 7,934 WACC 7.6% NPV per share (RMB) 13.6 Source: Bloomberg, HSBC estimates Xinyi Solar: SOTP valuation Segment Methodology Valuation (HKDm) Solar glass DCF 103,226 Solar farms ex-Xinyi Energy DCF 8

770、,508 Net debt (ex-Xinyi Energy) 2020 3,729 Xinyi Energy (50.05% shareholding) HSBC TP 17,081 Total value 132,543 No. of shares (m) 8,811 Rounded TP (HKD) 15.00 Source: HSBC estimates Multi-Asset Emerging Markets June 2021 78 LG Chemical Ltd.: SOTP valuation summary (KRWbn) Valuation (a) Petrochemica

771、ls & Farm Hannong Normalised EBITDA 3,299 Target EV/EBITDA multiple 8.0x 26,394 (b) Advanced Materials Normalised EBITDA 515 Target EV/EBITDA multiple 8.0x 4,124 (c) LG Energy solution Normalized EBITDA 3,327 Target EV/EBITDA multiple 15.7x 52,229 (d) Life Science Normalised EBITDA 177 Target EV/EBI

772、TDA multiple 12.5x 2,208 (e) Adjusted BV of Associate/JVs 2021e book value 866 Target P/B 0.4x 346 Consolidated enterprise value 85,301 (-) Net debt -8,323 (-) Value of preferred shares -2,927 (-) Value of minority claims -870 Equity value of common shares 73,181 # of common shares outstanding (mn s

773、hares) 69 Equity Value per share (KRW) 1,060,000 Source: HSBC estimates Grupo Mexico: Sum-of-the-parts valuation Equity value (100%) GMEX stake (%) GMEX stake (USDm) Southern Copper 51,764 88.90% 46,018 Asarco 3,529 100% 3,529 GMXT 8,322 69.50% 5,784 MPD 1,737 100% 1,737 GAP 699 Subtotal 57,766 Grou

774、p net debt (4Q20) 1,143 Subtotal 58,910 Holding company discount -20% Total 47,128 Number of shares outstanding 7,785 MXN (spot) as at 27 April 2021 19.83 Target price (MXN) 120 Source: HSBC estimates 79 Multi-Asset Emerging Markets June 2021 Bidvest: Sum-of-the-parts valuation Sum of the parts valu

775、ation approach gives a fair value of ZAR202/share Division (ZARm) EBIT - FY22e Interest Taxation Divisional earnings PE multiple Equity value Bidvest Freight 1,463 (186) (348) 928 15 14,001 Bidvest Services 3,721 (473) (887) 2,362 17 40,144 Bidvest Commercial 990 (126) (236) 629 13 7,881 Bidvest Bra

776、nded products 1,760 (224) (419) 1,117 9 10,252 Bidvest Automotive 606 (77) (144) 385 9 3,419 Bidvest Financial Services 395 (50) (94) 251 10 2,536 Bidvest South Africa (Total) 8,935 (1,135) (2,129) 5,671 78,234 Bidvest properties 582 (74) (139) 370 14 1,600 Corporate (279) 35 66 (177) 10 (1,771) Sha

777、re of Associates 130 - Minorities (339) 11 (3,729) Group 9,239 (1,174) (2,201) 5,655 76,105 Number of shares in issue (m) 339 Value per share (ZAR) 224 Holding company discount 0 Fair value SOTP (ZAR) 202 Source: Company Data, HSBC estimates Multi-Asset Emerging Markets June 2021 80 Notes 81 Multi-A

778、sset Emerging Markets June 2021 Disclosure appendix Analyst Certification The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any

779、analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other vie

780、ws or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this res

781、earch report: John Lomax, Dr. Murat Ulgen, Ali Cakiroglu, Wai-Shin Chan, CFA, Qu Hongbin, Erin Xin, Jingyang Chen, Ryan Wang, Fabio Balboni, Agata Urbanska-Giner, Jonathan Brandt, CFA, Leroy Mnguni, James Pomeroy, Dominic Kini, Paul Bloxham, Jamie Culling, Thomas C. Hilboldt, CFA, Howard Lau, CFA, H

782、elen Fang, Evan Li, Hebe Zhou, CFA, Corey Chan, Barak Hurvitz, CFA, Herald van der Linde, CFA, Evelyn Yu, Mariano Szachtman, Aybek Islamov, CFA, Raj Sinha, Ankur Agarwal, CFA, Carlos Gomez-Lopez, CFA, Neha Agarwala, CFA, Santhosh Seshadri, CFA, Ravi Jain, Lilyanna Yang, CFA, Henry Hall, Nick Webster

783、 and Shaun Chauke Brazilian Securities Exchange Commission (CVM) Regulation No. 598 Pursuant to CVM Ruling No. 598 (May 2018), HSBC has obtained from the analyst(s) listed above under Analyst Certification and disclosed (where applicable), the statements set forth in Article 21 and have rendered (wh

784、ere applicable) the statements set forth in Article 22, under the sections titled Analyst Certification and HSBC & Analyst Disclosures. The analyst(s) furthermore certifies(y) that the recommendations contained in this report have been prepared independently, even in relation to HSBC. Additionally,

785、for purposes of Article 20, the principal analyst responsible for compliance of the mentioned regulation is the first name in the list under Analyst Certification that has local certification, where applicable. Important disclosures Equities: Stock ratings and basis for financial analysis HSBC and i

786、ts affiliates, including the issuer of this report (“HSBC”) believes an investors decision to buy or sell a stock should depend on individual circumstances such as the investors existing holdings, risk tolerance and other considerations and that investors utilise various disciplines and investment h

787、orizons when making investment decisions. Ratings should not be used or relied on in isolation as investment advice. Different securities firms use a variety of ratings terms as well as different rating systems to describe their recommendations and therefore investors should carefully read the defin

788、itions of the ratings used in each research report. Further, investors should carefully read the entire research report and not infer its contents from the rating because research reports contain more complete information concerning the analysts views and the basis for the rating. From 23rd March 20

789、15 HSBC has assigned ratings on the following basis: The target price is based on the analysts assessment of the stocks actual current value, although we expect it to take six to 12 months for the market price to reflect this. When the target price is more than 20% above the current share price, the

790、 stock will be classified as a Buy; when it is between 5% and 20% above the current share price, the stock may be classified as a Buy or a Hold; when it is between 5% below and 5% above the current share price, the stock will be classified as a Hold; when it is between 5% and 20% below the current s

791、hare price, the stock may be classified as a Hold or a Reduce; and when it is more than 20% below the current share price, the stock will be classified as a Reduce. Our ratings are re-calibrated against these bands at the time of any material change (initiation or resumption of coverage, change in t

792、arget price or estimates). Upside/Downside is the percentage difference between the target price and the share price. Prior to this date, HSBCs rating structure was applied on the following basis: For each stock we set a required rate of return calculated from the cost of equity for that stocks dome

793、stic or, as appropriate, regional market established by our strategy team. The target price for a stock represented the value the analyst expected the stock to reach over our performance horizon. The performance horizon was 12 months. For a stock to be classified as Overweight, Multi-Asset Emerging

794、Markets June 2021 82 the potential return, which equals the percentage difference between the current share price and the target price, including the forecast dividend yield when indicated, had to exceed the required return by at least 5 percentage points over the succeeding 12 months (or 10 percent

795、age points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock was expected to underperform its required return by at least 5 percentage points over the succeeding 12 months (or 10 percentage points for a stock classified as Volatile*). Stocks between these b

796、ands were classified as Neutral. *A stock was classified as volatile if its historical volatility had exceeded 40%, if the stock had been listed for less than 12 months (unless it was in an industry or sector where volatility is low) or if the analyst expected significant volatility. However, stocks

797、 which we did not consider volatile may in fact also have behaved in such a way. Historical volatility was defined as the past months average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating, however, volatility had to move 2.5 percentage po

798、ints past the 40% benchmark in either direction for a stocks status to change. Rating distribution for long-term investment opportunities As of 04 June 2021, the distribution of all independent ratings published by HSBC is as follows: For the purposes of the distribution above the following mapping

799、structure is used during the transition from the previous to current rating models: under our previous model, Overweight = Buy, Neutral = Hold and Underweight = Sell; under our current model Buy = Buy, Hold = Hold and Reduce = Sell. For rating definitions under both models, please see “Stock ratings

800、 and basis for financial analysis” above. Fixed income: Basis for financial analysis This report is designed for, and should only be utilised by, institutional investors. Furthermore, HSBC believes an investors decision to make an investment should depend on individual circumstances such as the inve

801、stors existing holdings and other considerations. HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which depend largely on individual circumstances such as the investors existing holdings, risk tolerance and other considerations. Give

802、n these differences, HSBC has two principal aims in its fixed income research: 1) to identify long-term investment opportunities based on particular themes or ideas that may affect the future earnings or cash flows of companies in corporate credit and based on country-specific ideas or themes that m

803、ay affect the performance of these bonds in the case of covered bonds, in both cases on a six-month time horizon; 2) to identify trade ideas on a time horizon of up to four months, relating to specific instruments, which are predominantly derived from relative value considerations or driven by event

804、s and which, in the case of credit research, may differ from our long-term opinion on an issuer. Buy or Sell refer to a trade call to buy or sell that given instrument; HSBC has assigned a fundamental recommendation structure, as described below, only for its longer-term investment opportunities. HS

805、BC believes an investors decision to buy or sell a bond should depend on individual circumstances such as the investors existing holdings and other considerations. Different securities firms use a variety of terms as well as different systems to describe their recommendations. Investors should caref

806、ully read the definitions of the recommendations used in each research report. In addition, because research reports contain more complete information concerning the analysts views, investors should carefully read the entire research report and should not infer its contents from the recommendation.

807、In any case, recommendations should not be used or relied on in isolation as investment advice. HSBC Global Research is not and does not hold itself out to be a Credit Rating Agency as defined under the Hong Kong Securities and Futures Ordinance. Definitions for fundamental credit and covered bond r

808、ecommendations Overweight: For corporate credit, the issuers fundamental credit profile is expected to improve within the next six months. For covered bonds, the bonds issued in this country are expected to outperform those of the other countries in our coverage over the next six months. Buy 58% ( 3

809、0% of these provided with Investment Banking Services ) Hold 34% ( 28% of these provided with Investment Banking Services ) Sell 8% ( 27% of these provided with Investment Banking Services ) 83 Multi-Asset Emerging Markets June 2021 Neutral: For corporate credit, the issuers fundamental credit profi

810、le is expected to remain stable for up to six months. For covered bonds, the bonds issued in this country are expected to perform in line with those of the other countries in our coverage over the next six months. Underweight: For corporate credit, the issuers fundamental credit profile is expected

811、to deteriorate within the next six months. For covered bonds, the bonds issued in this country are expected to underperform those of other countries in our coverage over the next six months. Definitions for trades (Rates & Credit) Buy and Sell refer to a trade call to buy or sell a bond, option on a

812、n interest rate swap (swaption), interest rate cap or floor, inflation cap or floor, or Total Return Swap (TRS). The buyer/seller of a TRS receives/pays the total return of the underlying instrument or index at the end of the period and pays/receives the funding leg. Buy protection and Sell protecti

813、on refer to a credit default swap (CDS): the protection buyer/seller is effectively selling/buying the reference entitys credit risk. Pay and receive refer to a trade call to pay or receive the fixed leg of an interest rate swap (IRS), a non-deliverable IRS, the first-named leg of a basis swap, the

814、realised inflation leg of an inflation swap, or a forward rate agreement (FRA). An investor that executes a pay or receive trade is said to be paid or received. Payer and receiver refer to inflation caps or floors and to swaptions: a payer is an option giving the right but not the obligation to ente

815、r a paid position in an interest rate or inflation swap, and a receiver is an option giving the right but not the obligation to enter a received position in an interest rate or inflation swap. ASW (also asset-swap, Buy on asset swap, Buy on an asset-swapped basis): Buy a bond packaged with a swap th

816、at is tailored to eliminate the bonds interest rate risk, effectively transforming the bond to a floating rate instrument whilst preserving the credit exposure to the bond issuer. RASW (also reverse asset-swap, Sell on asset swap, Sell on an asset swapped basis): Sell a bond packaged with a swap tha

817、t is tailored to eliminate the bonds interest rate risk, effectively transforming the bond to a floating rate instrument whilst preserving the credit exposure to the bond issuer. Distribution of fundamental credit and covered bond recommendations As of 03 June 2021, the distribution of all independe

818、nt fundamental credit recommendations published by HSBC is as follows: All Covered issuers Issuers to whom HSBC has provided Investment Banking in the past 12 months Count Percentage Count Percentage Overweight 119 26 65 55 Neutral 219 49 92 42 Underweight 112 25 36 32 Source: HSBC For the purposes

819、of the distribution above the following mapping structure is used: Overweight = Buy, Neutral = Hold and Underweight = Sell. For rating definitions under both models, please see Definitions for fundamental credit and covered bond recommendations above. Distribution of trades As of 31 March 2021, the

820、distribution of all trades published by HSBC is as follows: All Covered instruments Issuers to whom HSBC has provided Investment Banking in the past 12 months Recommendation Count Percentage Count Percentage Buy 133 76 84 63 Sell 41 24 22 54 Source: HSBC For the purposes of the distribution above th

821、e following mapping structure is used: Buy/Sell protection/Receive/Buy Receiver/Sell Payer = Buy; and Sell/Buy protection/Pay/Buy Payer/Sell Receiver = Sell. ASW is counted as a buy of the bond and a paid swap, and RASW as a sell of the bond and a received swap. For rating definitions under both mod

822、els, please see Definitions for trades (Rates and Credit) above. Multi-Asset Emerging Markets June 2021 84 For the distribution of non-independent ratings published by HSBC, please see the disclosure page available at http:/ Recommendation changes for long-term investment opportunities Recommendatio

823、n History of CNOOC From To Date Analyst Overweight Neutral 31 Mar 2020 Shiwen Ding Neutral Overweight 15 Dec 2017 Shiwen Ding Not Rated Neutral 07 May 2013 Philip Wickham Source: HSBC Recommendation History of PTT PLC From To Date Analyst Not Rated Neutral 07 May 2013 Philip Wickham Source: HSBC Rec

824、ommendation History of WEICHAI POWER From To Date Analyst Not Rated Neutral 07 May 2019 Louisa Lam, CFA Source: HSBC To view a list of all the independent fundamental ratings/recommendations disseminated by HSBC during the preceding 12-month period, and the location where we publish our quarterly di

825、stribution of non-fundamental recommendations (applicable to Fixed Income and Currencies research only), please use the following links to access the disclosure page: Clients of Global Research and Global Banking and Markets: Clients of HSBC Private Banking: HSBC & Analyst disclosures Disclosure c

826、hecklist Company Ticker Recent price Price date Disclosure AIRTAC 1590.TW 960.00 04 Jun 2021 7 ALMARAI 2280.SE 56.50 03 Jun 2021 5, 6, 7 ANGANG STEEL 0347.HK 4.78 04 Jun 2021 4, 6 BANCO DO BRASIL BBAS3.SA 35.20 03 Jun 2021 6, 7 BANQUE SAUDI FRANSI 1050.SE 37.40 03 Jun 2021 5, 6, 7 BIDVEST GROUP LTD

827、BVTJ.J 197.23 03 Jun 2021 6, 7 CCR CCRO3.SA 13.90 03 Jun 2021 1, 5, 6, 7 CHINA GAS HOLDINGS LTD 0384.HK 28.65 04 Jun 2021 5, 6, 7 CNOOC 0883.HK 8.52 04 Jun 2021 4, 5, 6, 7, 11 EXTRA 4003.SE 124.20 03 Jun 2021 4, 7, 12 FIRSTRAND FSRJ.J 56.54 03 Jun 2021 5, 6, 7 FORMOSA PLASTICS 1301.TW 106.00 04 Jun

828、2021 6, 7 GERDAU GGBR4.SA 33.39 03 Jun 2021 7 GRUPO MEXICO GMEXICOB.MX 97.68 03 Jun 2021 2, 6, 7 ITAU UNIBANCO ITUB4.SA 31.62 03 Jun 2021 5, 6, 7 LG CHEMICAL LTD 051910.KS 809000.00 04 Jun 2021 6 MERCADOLIBRE INC MELI.OQ 1324.15 03 Jun 2021 6, 7 MMG LIMITED 1208.HK 3.94 04 Jun 2021 7 PTT PLC PTT.BK

829、41.25 04 Jun 2021 1, 5, 6, 7 SAUDI NATIONAL BANK 1180.SE 54.00 03 Jun 2021 5, 6, 7 STANDARD BANK SBKJ.J 136.50 03 Jun 2021 5, 6, 7 VALE VALE.K 22.40 03 Jun 2021 6, 7 WEICHAI POWER 2338.HK 17.02 04 Jun 2021 4, 6, 7 WEICHAI POWER A 000338.SZ 17.55 04 Jun 2021 4, 6, 7 XINYI SOLAR 0968.HK 13.10 04 Jun 2

830、021 4, 11 ZOOMLION HEAVY INDUSTRY 1157.HK 8.73 04 Jun 2021 4, 6, 7 ZOOMLION HEAVY INDUSTRY A 000157.SZ 10.25 04 Jun 2021 4, 6, 7 Source: HSBC 1 HSBC has managed or co-managed a public offering of securities for this company within the past 12 months. 2 HSBC expects to receive or intends to seek comp

831、ensation for investment banking services from this company in the next 3 months. 85 Multi-Asset Emerging Markets June 2021 3 At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this company. 4 As of 30 April 2021, HSBC beneficially owned 1%

832、 or more of a class of common equity securities of this company. 5 As of 30 April 2021, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of investment banking services. 6 As of 30 April 2021, this company was a

833、 client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of non-investment banking securities-related services. 7 As of 30 April 2021, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or

834、 paid compensation to HSBC in respect of non-securities services. 8 A covering analyst/s has received compensation from this company in the past 12 months. 9 A covering analyst/s or a member of his/her household has a financial interest in the securities of this company, as detailed below. 10 A cove

835、ring analyst/s or a member of his/her household is an officer, director or supervisory board member of this company, as detailed below. 11 At the time of publication of this report, HSBC is a non-US Market Maker in securities issued by this company and/or in securities in respect of this company 12

836、As of 01 Jun 2021, HSBC beneficially held a net long position of more than 0.5% of this companys total issued share capital, calculated according to the SSR methodology. 13 As of 01 Jun 2021, HSBC beneficially held a net short position of more than 0.5% of this companys total issued share capital, c

837、alculated according to the SSR methodology. HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt (including derivatives) of companies covered in HSBC Research on a principal or agency basis or act as a market maker or liquidit

838、y provider in the securities/instruments mentioned in this report. Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking, sales & trading, and principal trading revenues. Whether, or in what time frame, an update of this an

839、alysis will be published is not determined in advance. Non-U.S. analysts may not be associated persons of HSBC Securities (USA) Inc, and therefore may not be subject to FINRA Rule 2241 or FINRA Rule 2242 restrictions on communications with the subject company, public appearances and trading securiti

840、es held by the analysts. Economic sanctions imposed by the EU, the UK, the USA, and certain other jurisdictions generally prohibit transacting or dealing in any debt or equity issued by Russian SSI entities on or after 16 July 2014 (Restricted SSI Securities). Economic sanctions imposed by the USA a

841、lso generally prohibit US persons from purchasing or selling publicly traded securities issued by companies designated by the US Government as “Communist Chinese military companies” (CMCs) or any securities that are derivative of, or designed to provide investment exposure, to the targeted CMC secur

842、ities (collectively, Restricted CMC Securities). This report does not constitute advice in relation to any Restricted SSI Securities or Restricted CMC Securities, and as such, this report should not be construed as an inducement to transact in any Restricted SSI Securities or Restricted CMC Securiti

843、es. For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at HSBC Private Banking clients should contact their Relationship Manager for queries regarding other research reports. In order to find out more about the

844、 proprietary models used to produce this report, please contact the authoring analyst. Additional disclosures 1 This report is dated as at 06 June 2021. 2 All market data included in this report are dated as at close 01 June 2021, unless a different date and/or a specific time of day is indicated in

845、 the report. 3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBCs analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting lin

846、e independent of HSBCs Investment Banking business. Multi-Asset Emerging Markets June 2021 86 Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an app

847、ropriate manner. 4 You are not permitted to use, for reference, any data in this document for the purpose of (i) determining the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments, (ii) determining the price at which a financial instrument ma

848、y be bought or sold or traded or redeemed, or the value of a financial instrument, and/or (iii) measuring the performance of a financial instrument or of an investment fund. 5 As of 28 May 2021 HSBC owned a significant interest in the debt securities of the following company(ies): ALMARAI Production

849、 & distribution disclosures 1. This report was produced and signed off by the author on 04 Jun 2021 17:03 GMT. 2. In order to see when this report was first disseminated please see the disclosure page available at https:/ 87 Multi-Asset Emerging Markets June 2021 Disclaimer Legal entities as at 1 De

850、cember 2020 UAE HSBC Bank Middle East Limited, DIFC; HSBC Bank Middle East Limited, Dubai; HK The Hongkong and Shanghai Banking Corporation Limited, Hong Kong; TW HSBC Securities (Taiwan) Corporation Limited; CA HSBC Securities (Canada) Inc.; France HSBC Continental Europe; Spain HSBC Continental Eu

851、rope, Sucursal en Espaa; Italy HSBC Continental Europe, Italy; Sweden HSBC Continental Europe Bank, Sweden Filial; DE HSBC Trinkaus & Burkhardt AG, Dsseldorf; 000 HSBC Bank (RR), Moscow; IN HSBC Securities and Capital Markets (India) Private Limited, Mumbai; JP HSBC Securities (Japan) Limited, Tokyo

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