Review and Preview
April 07, 2009
By Ted Wieseman | New York
Treasuries posted significant losses in the intermediate part of the curve over the past week and more moderate downside at the short and long ends, though all of the losses came in a big sell-off to close out that week that gathered steam in the late morning Friday after the last of the Fed’s daily Treasury or agency purchases was done and investors started to look ahead to another upcoming week of heavy supply. Prior to the plunge to close out the week, soft economic data and the Fed buying had been providing support and helping keep yields in fairly narrow ranges even as stocks moved significantly higher over the course of the week after a soft start Monday. The week’s stock market upside, moreover, for most of the week disconnected from sell-offs in credit and other risk markets. The gains became much more broadly based Friday, however, with credit rallying strongly, which added to the weakness in Treasuries on the day as there was a broader basis for scaling back the flight-to-safety bid. Still, on net stocks continue mostly to be a relative outlier in the strength of their recent gains compared to other risk markets. Doubts certainly seem to have risen about the likely effectiveness of the Treasury’s legacy asset and loan buying plans, with the assets most directly potentially impacted seeing recent downside reversals that have been particularly pronounced in subprime. The Fed was in the market buying interest rate debt of one form or another every day the past week, with three rounds of Treasury purchases totaling US$16 billion, two agency purchases on the other days totaling US$6 billion, and heavy ongoing daily MBS buying that has been ramped up to a better-than-US$6-billion-daily average over the past couple weeks. There was some disappointment in the latest week’s operations, in particular over how small Monday’s buying at the long end was, with yields across the interest rate space continuing to hold somewhat lower than where they were before the Fed ramped up its quantitative easing strategy a couple weeks ago even as stocks have surged higher, issuance has been enormous, and a belief has built up among many investors that the economy has turned the corner – an idea we don’t share at this point and that was certainly not reflected to any meaningful extent in the past week’s poor economic numbers. However, it seems clear that the Fed’s more aggressive policy is having a substantial impact in holding rates down relative to where they would otherwise be. The key round of early economic figures for March released over the past week was uniformly terrible in absolute terms, though somewhat mixed directionally. A particularly bad employment report stood out, however, against directionally mixed ISM surveys, though with both remaining well below the 50-breakeven level, and some improvement, though to a still-dreadful level, in motor vehicle sales. Weakness in other data, notably in the construction spending and factory orders reports, also pointed to a weaker trajectory for 1Q growth, and we cut our 1Q GDP estimate to -6.0% from -5.1%.
On the week, benchmark Treasury yields moved 6-17bp higher. The market was a bit higher across the curve through Thursday’s close but fell hard Friday after the last of the daily Fed Treasury and agency purchases wrapped up in late morning. The 2-year yield rose 6bp to 0.97%, 3-year 9bp to 1.35%, 5-year 9bp to 1.89%, 7-year 17bp to 2.53%, 10-year 15bp to 2.91% and 30-year 9bp to 3.71%. The squeeze at the very short end eased up somewhat once quarter-end was past, with the 4-week bill’s yield up 15bp to 0.16%, matching where effective fed funds has been trading recently, and the 3-month yield up 8bp to 0.21%. Despite an overall positive week for commodity prices – oil and gasoline prices were little changed after a fair amount of volatility, but metals and food items moved higher – TIPS struggled ahead of supply after what had been several weeks of very strong relative performance. The 5-year TIPS yield rose 16bp to 0.98%, 10-year 16bp to 1.50% and 20-year 25bp to 2.17%. The benchmark 10-year inflation breakeven hit a recent low of 0.84% on March 6, moved as high as 1.48% on March 26, before moving down slightly to close the week at 1.41%. Yields on current coupon 4% MBS had been holding pretty close to 3.90% for a couple weeks since a strong rally following the FOMC meeting, but saw significant weakness in line with the Treasury sell-off Friday to send prices a bit below par and yields a bit above 4%, moderating the net improvement since the Fed stepped up its buying to about 15bp and about 30bp since the highs for the year were hit at the end of February. On the other hand, strong demand for new TLG and agency debt issues over the past week helped the agency sector perform relatively quite strongly on the week and avoid the weakness in Treasuries and mortgages. With quarter-end past, 3-month Libor resumed moving lower, falling 6bp on the week to 1.16%, a low since mid-January, sending the spot 3-month Libor/OIS spread a few bp lower to 95bp. This was largely not extrapolated into a further improvement in forward spreads, however, which pressured swaps. The forward Libor/OIS spread to June did narrow a few bp on the week to near 85bp, but September widened a couple of bp to around 80bp, December 5bp to 88bp, and March 8bp to 77bp. Note, though, that these forward spreads are still showing decent net improvement over the past few weeks that preceded the recently resumed improving trend in spot Libor in response to the FOMC meeting and Treasury plan announcement. Still, following the prior week’s big narrowing, the lack of additional progress in forward Libor spreads this week helped to send the benchmark 2-year swap spread up 3bp to 57bp and 5-year 4.5bp to 55bp. Although other markets finally mostly caught a good bid late in the week to partially close the gaps, stocks for the week as a whole remained a substantial outlier compared to weaker performances from other risky assets. The S&P 500 gained another 3% on the week for a 10% rally over the past two weeks in the aftermath of the Treasury’s bad bank plan announcement. On the other hand, a big gain Friday substantially pared a worse earlier showing, but at 187bp in late trading, the investment grade CDX index was still 4bp wider on the week and showing a more constrained 12bp improvement over the past two weeks. High yield credit performed somewhat better, with the HY CDX index 20bp tighter at 1,456bp through Thursday and significantly extending the gains Friday with a further rally of over a point. The asset classes most directly impacted by the Treasury’s plans all traded worse on the week to varying extents, with subprime continuing to perform terribly. All the subprime ABX indices ended the week at, or not far from, record lows, with the AAA index falling more than 2 points to 23.98. The commercial mortgage CMBX market saw substantial weakness through the first part of the week, but at least the AAA was able to mostly reverse the downside Thursday and Friday, ending the week 12bp wider at 573bp. Weakness in the lower-rated indices was a lot bigger, and there was little or no improvement late in the week. Meanwhile, the leveraged loan LCDX index wound up the week not much changed, trading 10bp wider at 1,923bp through midday Friday. Relative to the Friday before the Treasury’s announcement, the AAA ABX index has now fallen a quarter point, while the AAA CMBX index has tightened 176bp and the LCDX index has tightened 349bp. For the latter two that have shown net improvement, the former is now almost back to being unchanged on a year-to-date basis after ending 2008 at 527bp, but the latter remains deeply in the red relative to the 2008 close of 1,303bp. The key round of early March economic news was weak, with another disastrous employment report again standing out. Non-farm payrolls plunged 663,000 in March, bringing the average drop over the past five months to 667,000, an unprecedented run of job losses in absolute terms and the worst in percentage terms over such a period since the 1973-75 recession. Weakness in March remained very broadly based, with severe declines again in manufacturing, construction, retail trade, wholesale trade, finance, business services and leisure. Other details of the report were also all terrible. The unemployment rate surged another 0.4pp to 8.5%, a high since 1983. The average workweek fell a tenth to a record low 33.2 hours, causing total hours worked to plummet 1.0%. Average hourly earning ticked up only 0.2%, which along with the collapse in hours worked caused aggregate weekly payrolls, a proxy for total wage and salary income, to plummet 0.7%. The past week’s jobless claims report showed substantial deterioration as we move towards the survey period for the April employment report, so at this point there is no reason to expect the extremely weak recent trend in the jobs report to show any improvement next month. Indeed, at the rate jobs are disappearing, the unemployment rate could be into double-digits as early as June. Meanwhile, the two ISM surveys were mixed directionally but very weak in both cases in absolute terms. The manufacturing ISM composite index rose half a point in March to 36.3, remaining deeply in contractionary territory but slightly extending a rebound off the low of 32.9 hit in December. Upside in the overall index was driven by improvement in the orders index (41.2 versus 33.1) to a seven-month high, though to a level still well below the 50-breakeven level. Meanwhile, employment (28.1 versus 26.1) rose only slightly from last month’s record low and the production index (36.4 versus 36.3) was little changed. All 18 industry groups reported a decline in activity. The composite non-manufacturing ISM index fell to 40.8 in March from 41.6 in February, holding somewhat above the all-time low of 37.4 hit in November but moving deeper into recessionary territory. The business activity index (44.1 versus 40.2) wasn’t as weak in March as February, but this was more than offset by a deterioration in orders (38.8 versus 40.7) and particularly a plunge in the employment index (32.3 versus 37.3). Weakness across sectors was very broadly based, with 17 of 18 industry groups reporting contraction. Aside from these weak early indications for March economic activity, assorted data from earlier in the quarter pointed to larger contraction in the economy in 1Q. Building in weakness in construction spending that pointed to a larger decline in residential investment, negative revisions to capital goods shipments in the factory orders report and computer production in the annual IP revisions, and weaker-than-expected manufacturing inventory numbers in the factory orders report and updated figures on motor vehicle inventories, we cut our 1Q GDP estimate to -6.0% from -5.1%, which would nearly match the -6.3% in 4Q. We see consumption posting a small 1.5% rebound in 1Q, however, after a near record 4.1% annualized collapse in 2H08. This should offset accelerating declines in residential investment, which we see plunging 36% and business investment, which we see falling 29% – which on top of a 22% drop in 4Q would mark the worst two-quarter drop on record – and a small decline in government spending after a small increase in 4Q to lead to a still severe but somewhat smaller 3.7% decline in 1Q final domestic demand after the 5.8% collapse recorded in 4Q. Instead, we see a major inventory drawdown, accounting for a much larger share of the weakness in 1Q than in 4Q. We see inventories reducing 1Q growth by about 2.5 percentage points after being only a marginal negative in 4Q, and the absolute dollar decline we are projecting for real inventories in excess of US$100 billion would be close to a record, as a share of GDP. Even if inventory liquidation continues at a very rapid pace in 2Q, as seems likely given how high I/S ratios are across the economy, arithmetically if the rate of decline moderates from the US$100+ billion plunge we see in 1Q, it would add to GDP growth in 2Q, potentially significantly. However, we would consider any big moderation in the rate of GDP decline in 2Q at this point to be more of a temporary head fake than the beginning of sustained revival, given how little progress has been made so far in addressing the underlying credit and housing market problems plaguing the economy. The short upcoming week, with an early close Thursday ahead of the Good Friday holiday and little economic data, should be fairly quiet, with Treasury market focus likely to be mostly on the latest flood of supply. A US$6 billion reopening of the 10-year TIPS (unchanged in size, extending the run of steady TIPS issuance as nominal issue sizes have been ramped up) will be auctioned Tuesday followed by a 3-year Wednesday and a second reopening of the nominal 10-year Thursday. The 3-year and 10-year sizes will be announced Monday. We look for the 3-year to be bumped up another US$2 billion to US$36 billion but the 10-year reopening to be held steady at US$18 billion after last month’s first reopening of the issue was bumped up US$2 billion from the prior 10-year reopening size. That would make for a hefty US$60 billion in additional coupon supply for the week, though this would at least be a good bit less than the record run of US$98 billion in 2s, 5s and 7s the week of March 23. That US$98 billion weekly record should soon be bested, however, when the Treasury sells 5-year TIPS, 2s, 5s and 7s in a five-trading-day period running from April 23 to April 29. The economic data calendar is light. Monthly sales results from most major companies on Thursday will further inform retail sales forecasts for March after the bounce in motor vehicle sales. After hitting their lowest level since 1981 in February, motor vehicle sales improved to a 9.7 million unit annual rate in March from 9.1 million in February, so we’ll see if this carries over in any way into non-auto retail sales, which showed some small improvement in January and February after a disastrous holiday shopping season. Otherwise, the only particularly notable data release while markets are open is the trade balance Thursday. Friday’s not a government holiday, so the Treasury budget will be released to no notice on Friday also. We expect the trade deficit to extend the narrowing trend seen in recent months, falling another US$3 billion to a seven-year low of US$33 billion on flat exports and a 1.9% decline in imports. Modest upside in capital goods shipments and aircraft delivery figures combined with some stabilization in commodity prices point to a temporary flattening out in exports on the heels of the extraordinary decline seen since the middle of last year. However, based on a severe further slowdown in incoming cargo at the key West Coast ports, imports are likely to extend their recent collapse even as energy imports should flatten out after being more than cut in half since the end of the summer.
Important Disclosure Information at the end of this Forum
QE-Easy About What’s Next?
April 07, 2009
By Luis Arcentales, CFA & Daniel Volberg|
No central bank in Latin America has been as bold as Chile’s in easing monetary policy so far in this cycle. Since the start of the year, the authorities have cut interest rates by a cumulative 600bp – an unprecedented easing cycle in speed and magnitude – bringing the target rate to 2.25%, slightly above the historical low of 1.75% reached during the brief episode of deflation in 1H04. Importantly, more rate cuts appear to be on the cards: though the central bank stressed that the period of extraordinarily aggressive rate cuts was behind us, it pointed out that additional easing may be necessary but in “magnitude and frequency comparable to historical patterns”, suggesting future moves in the 25-50bp range (see “Chile: Monetary Fury”, EM Economist, March 13, 2009). With interest rates already near historical lows and set to dip further, Chile watchers have started to wonder whether the central bank will resort to unconventional monetary measures to enhance potential policy traction and this, in turn, could undermine the peso. Throughout the world, central banks have introduced various forms of quantitative easing (QE) programs as a continuation of previous aggressive cutting of interest rates. Indeed, the central banks of the US, Japan, UK, Switzerland, Israel and Korea are now using active QE, purchasing a mix of risky assets, government securities and foreign exchange, according to Manoj Pradhan from our global team (see “QE2 – Size Matters”, The Global Monetary Analyst, March 25, 2009). And the countries that have adopted QE measures have seen their currencies weaken. Could Chile be next in line in adopting such unconventional policy measures? We doubt it. We think it is unlikely that Chile will engage in quantitative easing for three reasons. First, while monetary conditions in Chile have tightened due to the global turmoil, the financial system has continued to work remarkably well. Second, monetary and fiscal authorities have already applied a hefty dose of stimulus – including a new 20-point plan on March 29 to enhance competition in the financial system and boost credit – that should work over time, thus lessening the pressure on the central bank to apply unconventional policy actions. Last, though there may be some near-term merits to engaging in quantitative easing – such as lowering the cost of capital for longer-dated investments – the medium-term benefits are questionable at best. Thus, we believe that the authorities, with their inflation mandate, would be hesitant to adopt such measures. Financial System: Tighter but Working While monetary conditions in Chile have tightened due to the impact of the global turmoil, the financial system has continued to work remarkably well. Accordingly, with the domestic financial system not suffering from any form of ‘blockage’, we think that the central bank is likely to limit itself to further interest rate cuts in the coming months. To be fair, banks have tightened lending standards significantly to business, housing and consumers alike; however, the nature of this tightening has been benign in nature: the reason most commonly cited has been the deteriorating outlook for economic activity and associated worsening in the perceived creditworthiness of borrowers, rather than deeper concerns, as in many developed markets, about the soundness of the system. The balance sheets of Chilean financial institutions have not been plagued by toxic assets and, in fact, banks are considered the 18th most sound out of 131 countries surveyed by the World Economic Forum. Indeed, following a brief period of severe liquidity pressures in late September and October of last year, conditions have largely normalized, in great part thanks to the central bank’s firm and successful actions. First, the central bank proactively concluded its US dollar accumulation strategy prematurely last September, citing a “relevant deterioration in global financial markets”. At the same time, the central bank resumed currency swap operations for one month, later extending the program to six months in the form of US$500 million in 60-to-90 day swaps up to a maximum amount of US$5.0 billion (the swap program was subsequently extended and will be made available during all of 2009). In addition, the central bank added an extra degree of flexibility to the banking system by allowing institutions holding US dollar deposits to use pesos, euros or yen for the purpose of satisfying reserve requirements. Finally, the range of accepted collateral for repo operations was expanded. In addition, the central bank has aggressively eased its monetary policy, opening up the alternative of a deep domestic capital market to businesses that were affected by dislocations in foreign financial markets. Starting on January 8, the central bank began to slash interest rates, bringing them down to 2.25% by March 12 – an unprecedented 600bp in a matter of three months. Lower domestic rates – in a context of more limited external financing, cautiousness among local banks and some administrative changes like the temporary scrapping of the stamp tax – have sparked a significant increase in domestic corporate issuance, which has allowed companies to successfully refinance debt, fund working capital and finance new investments as well. Since last November, when a major pulp and paper producer re-opened markets by successfully placing over US$200 million in debt, there has been a wave of domestic corporate issuance. And issuance has not been limited to exporters: in January, Chile’s state-run oil company sold over US$300 million in bonds domestically, a large retailer placed debt worth US$104 million, the country’s largest fertilizer maker sold US$173 million in debt and, just last week, an important power generator announced its plan to place near US$200 million. Given indications of further, large corporate issuance in the coming months, the aid from lower rates, combined with good demand from insurance companies and pension funds – the AFP’s external assets represented just 24.1% of the total in February, off from 26.9% in December – should help to cushion the external financial shock. Policy Stimulus Not only has Chile been proactive in applying policy stimulus, on both the fiscal and monetary fronts; it has also delivered them effectively, in our view. Armed with huge resources – record international reserves and fiscal assets of near 15% of GDP – it is not surprising that Chile has been able to provide a significant dose of stimulus, lessening the pressure on the central bank to engage in unconventional policy actions. Indeed, more than the scale of the stimulus, what stands out is the sound way in which policymakers have put these resources to work. In the context of the ongoing economic slump and electoral calendars, we have highlighted that perhaps the greatest risk to Latin America is that policy slippage or even reversals take place as policy remedies being deployed in the developing world are adopted (and adapted) in Latin America (see “Latin America: Globally Challenged”, EM Economist, April 3, 2009). Chile, in contrast, announced at the end of March the latest round of credit-enhancing policy measures that suggest that the economic slump is acting as a catalyst to accelerate reform rather than as an excuse to take populist steps in the wrong direction. The two rounds of measures announced in 4Q08 worth roughly US$2 billion were focused on the credit crunch and the sectors that seemed most vulnerable: SMEs – via loan guarantees and other credit facilities – and housing. In addition, the authorities recapitalized state-owned BancoEstado, which has since gained market share from private banks. As the credit turmoil morphed into a real economic one, so did the government’s measures: the US$4.0 billion package unveiled in January included business tax cuts, US$700 million for infrastructure, US$1.0 billion to fund Codelco’s fixed investment and handouts for low-income families. And at the end of March the authorities proposed a series of administrative measures aimed at boosting credit and competition in the financial system, which they project could expand credit by some US$3.6 billion at limited fiscal cost. The measures include providing more room for insurance companies to participate in domestic loan markets and boosting the financial options to people and businesses by expanding the size and operations eligible for government-sponsored credit programs and guarantees. In addition, the authorities proposed the elimination of capital gains taxes on new bond issuances; if approved, this would be a very positive step for domestic capital markets. With ample fiscal and monetary stimulus already in the pipeline and with policy measures moving in the right direction despite the intensifying economic slump, we suspect that there is no urgent need for the central bank to engage in unconventional policy moves. In fact, the central bank still has room to lower rates further and explicitly signals that rates could remain low for longer as policy tools at its disposal. Credibility Matters Within its inflation mandate, Chile’s central bank credibility could suffer if it engaged in active QE, in our view, with such policies representing an important setback for the Chilean peso. Though we are sympathetic to some of the near-term merits of engaging in quantitative easing – whether with the objective of simply expanding the money supply and/or altering relative interest rates – the medium-term benefits are at best questionable, in our view. Thus, we believe that the Chilean authorities would be very hesitant to move in this direction. No central bank in the region came under so much heat as Chile’s for its decision to intervene in currency markets and for its handling of the surge in inflation, which rose to 14-year highs in 2008. In fact, we were critical of the move starting last April 14 to start accumulating US$8 billion due to the need to “strengthen Chile’s international liquidity position”, which at the time we found inconsistent with the urgent task of addressing mounting price pressures and keeping inflation expectations in check (see “Chile: A Risky Bet”, EM Economist, April 11, 2008). Indeed, even as it intervened in currency markets, the central bank was forced to hike its target rate by 200bp to 8.25% between June and September as the inflation outlook worsened. In our view, this policy inconsistency in the context of its inflation mandate played a key role, at that point, in undermining the peso, which had appreciated strongly until then. This is in contrast to the widely held view that the currency weakness was driven by the deterioration in the terms of trade – by then, that deterioration was well underway. With the benefit of hindsight, to be fair, the rapid deterioration of the global backdrop eventually validated the central bank’s decision to accumulate reserves, leaving it in a far stronger position to deal with the global credit crunch. However, in the months following the decision to intervene, there was no shortage of Chile watchers who questioned the central bank’s inflation-fighting credentials. With the central bank’s credibility fully restored, in our view, by its firm and successful actions to deal with the local funding pressures, engaging in active QE could once again raise questions about its objectives. Were the authorities to engage in quantitative easing, we suspect it would take the form of the central bank’s retiring its own debt. We cannot rule it out completely, but within the context of its inflation mandate, active quantitative easing represents a very unorthodox policy. We suspect that the authorities are hesitant to adopt it, especially given that the financial system has been playing its role adequately, the authorities have delivered aggressive fiscal and monetary stimulus and are in a position to deliver still more, if necessary. Bottom Line With superior fundamentals and proactive policymaking, Chile has been rewarded by the markets. And with the globe in the midst of a severe downturn of uncertain depth and duration, this differentiation seems well justified, in our view. Whether we focus on Chile’s fiscal assets equivalent to 15% of GDP, its sound policymaking or regulation, Chile seems to be in an enviable position to cushion the external shocks and engineer a soft landing. And as more and more countries around the world are forced to adopt extraordinary policy measures – such as quantitative easing – we think that Chile is in a strong enough position to rely exclusively on conventional policy tools in engineering its soft landing; therefore, we expect Chile to continue to be rewarded by the markets in the months to come.
Important Disclosure Information at the end of this Forum
Disclosure Statement
The information and opinions in Morgan Stanley research were prepared or are disseminated by Morgan Stanley & Co. Incorporated and/or Morgan Stanley C.T.V.M. S.A. and/or Morgan Stanley & Co. International plc and/or Morgan Stanley Japan Securities Co., Ltd. and/or Morgan Stanley Asia Limited and/or Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number 200008434H) and/or Morgan Stanley Taiwan Limited and/or Morgan Stanley & Co International plc, Seoul Branch, and/or Morgan Stanley Australia Limited (A.B.N. 67 003 734 576, holder of Australian financial services licence No. 233742, which accepts responsibility for its contents), and/or Morgan Stanley India Company Private Limited and their affiliates (collectively, "Morgan Stanley"). As used in this disclosure section, Morgan Stanley includes RMB Morgan Stanley (Proprietary) Limited, Morgan Stanley & Co International plc and its affiliates.
Global Research
Conflict Management Policy
Morgan Stanley Research observes our conflict management policy, available at www.morganstanley.com/institutional/research/conflictpolicies.
Important Disclosures
Morgan Stanley Research does not provide individually tailored investment advice. It has been prepared without regard to the circumstances and objectives of those who receive it. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages them to seek a financial adviser's advice. The appropriateness of an investment or strategy will depend on an investor's circumstances and objectives. Morgan Stanley Research is not an offer to buy or sell any security or to participate in any trading strategy. The value of and income from your investments may vary because of changes in interest rates or foreign exchange rates, securities prices or market indexes, operational or financial conditions of companies or other factors. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized.
With the exception of information regarding Morgan Stanley, research prepared by Morgan Stanley Research personnel is based on public information. Morgan Stanley makes every effort to use reliable, comprehensive information, but we do not represent that it is accurate or complete. We have no obligation to tell you when opinions or information in Morgan Stanley Research change apart from when we intend to discontinue research coverage of a company. Facts and views in Morgan Stanley Research have not been reviewed by, and may not reflect information known to, professionals in other Morgan Stanley business areas, including investment banking personnel.
To our readers in Taiwan: Morgan Stanley Research is distributed by Morgan Stanley Taiwan Limited; it may not be distributed to or quoted or used by the public media without the express written consent of Morgan Stanley. To our readers in Hong Kong: Information is distributed in Hong Kong by and on behalf of, and is attributable to, Morgan Stanley Asia Limited as part of its regulated activities in Hong Kong; if you have any queries concerning it, contact our Hong Kong sales representatives.
Morgan Stanley Research is disseminated in Japan by Morgan Stanley Japan Securities Co., Ltd.; in Canada by Morgan Stanley Canada Limited, which has approved of and takes responsibility for its contents in Canada; in Germany by Morgan Stanley Bank AG, Frankfurt am Main, regulated by Bundesanstalt fuer Finanzdienstleistungsaufsicht (BaFin);in Spain by Morgan Stanley, S.V., S.A., a Morgan Stanley group company, supervised by the Spanish Securities Markets Commission(CNMV), which states that it is written and distributed in accordance with rules of conduct for financial research under Spanish regulations; in the US by Morgan Stanley & Co. Incorporated, which accepts responsibility for its contents. Morgan Stanley & Co. International plc, authorized and regulated by Financial Services Authority, disseminates in the UK research it has prepared, and approves solely for purposes of section 21 of the Financial Services and Markets Act 2000, research prepared by any affiliates. Private UK investors should obtain the advice of their Morgan Stanley & Co. International plc representative about the investments concerned. In Australia, Morgan Stanley Research and any access to it is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. RMB Morgan Stanley (Proprietary) Limited is a member of the JSE Limited and regulated by the Financial Services Board in South Africa. RMB Morgan Stanley (Proprietary) Limited is a joint venture owned equally by Morgan Stanley International Holdings Inc. and RMB Investment Advisory (Proprietary) Limited, which is wholly owned by FirstRand Limited.
Trademarks and service marks in Morgan Stanley Research are their owners' property. Third-party data providers make no warranties or representations of the accuracy, completeness, or timeliness of their data and shall not have liability for any damages relating to such data. The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and S&P. Morgan Stanley bases projections, opinions, forecasts and trading strategies regarding the MSCI Country Index Series solely on public information. MSCI has not reviewed, approved or endorsed these projections, opinions, forecasts and trading strategies. Morgan Stanley has no influence on or control over MSCI's index compilation decisions. Morgan Stanley Research or portions of it may not be reprinted, sold or redistributed without the written consent of Morgan Stanley. Morgan Stanley research is disseminated and available primarily electronically, and, in some cases, in printed form. Additional information on recommended securities/instruments is available on request.
The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (DIFC Branch), regulated by the Dubai Financial Services Authority (the DFSA), and is directed at wholesale customers only, as defined by the DFSA. This research will only be made available to a wholesale customer who we are satisfied meets the regulatory criteria to be a client.
The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (QFC Branch), regulated by the Qatar Financial Centre Regulatory Authority (the QFCRA), and is directed at business customers and market counterparties only and is not intended for Retail Customers as defined by the QFCRA.
As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment advisory activity. Investment advisory service is provided in accordance with a contract of engagement on investment advisory concluded between brokerage houses, portfolio management companies, non-deposit banks and clients. Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely to this information stated here may not bring about outcomes that fit your expectations.
|
![](/img/clear.gif"){kind=spacer}