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For professional clients only
HSBC GIF Indian Equity PresentationSeptember 2011
2
HSBC Overview
HSBC Global Asset Management
The Investment Team & Emerging Markets Investment Resources
Investment Philosophy and Process
Risk management
Market overview
HSBC GIF Indian Equity Fund overview
Competitor analysis
Outlook
Appendix
Contents
HSBC Overview
4
HSBC overview
Emerging markets are at the heart of HSBC's corporate identity
HSBC’s roots were formed in China and India in the 19th century
HSBC Group has maintained a strong presence in global trade, particularly in India and China, the world's most dynamic emerging markets.
Headquartered in London, HSBC is one of the largest banking and financial services organisations in the world, with over 300,000 employees spanning
an international network of around 7,500 offices in the Asia-Pacific region, Europe, the Americas, the Middle East and Africa.
One of the largest global financial services networks with offices in 87 countries of which 54 are in emerging market countries
A unique local market knowledge, enhancing the portfolio management processes
Direct access to local companies and investment opportunities
Source: HSBC Holdings Plc, data as of 31st December 2010.
5
Mexico
Honduras
El Salvador Nicaragua
Costa Rica Panama
Colombia
PeruBrazil
ParaguayChile
ArgentinaUruguay
South Africa
Mauritius
Algeria
Libya Egypt
PolandCzech RepublicSlovakia
TurkeyLebanon
IsraelPalestine
Georgia
ArmeniaIraq
KuwaitBahrain, QatarUAE
OmanSaudi Arabia
Kazakhstan
Russia
PakistanChina Korea
India
MaldivesSri Lanka
Taiwan
Philippines
Indonesia
BruneiMalaysia
Singapore
Hong Kong
ThailandVietnam
Macau
Malta
HSBC Global Asset ManagementHSBC Holdings plc
Source: HSBC Global Asset Management, as of 31 December 2010
HSBC’s presence in emerging markets
HSBC Global Asset Management
7
HSBC Global Asset Management
HSBC Global Asset Management is a leading global asset management firm managing assets totalling USD453.4 billion at the end of June 2011.
HSBC Global Asset Management offers clients around the world a diverse and full range of active and quantitative investment products including equity, fixed income, liquidity and alternative strategies.
Worldwide client base invested in both segregated accounts and pooled funds.
HSBC Global Asset Management is part of HSBC Holdings plc.
8
HSBC Global Asset Management -
A leader in emerging markets
Complete investment solutions including equity, fixed income, balanced and alternatives products through:
-
Local strategies: Products managed and distributed locally
-
Global, regional and single country strategies: Products managed
across multiple geographies and distributed globally
An extensive range of emerging markets funds, including some of the world's largest in their sectors
-
One of the largest offshore managers of Brazil, India and BRIC equity funds
-
Our flagship global emerging market products have made us leaders in the management of assets in a wide array of emerging markets, not only in Brazil, India and China but also in Taiwan, Thailand and Turkey
Emerging Markets AUM by region (US$ billion)
Source: HSBC Global Asset Management, Assets under management data as of 30th June 2011
Emerging Markets AUM by asset class (US$ billion)
Among the largest managers of emerging market funds globally, with approximately USD139 billion in assets under management and over 200 dedicated emerging markets investment professionals in 14 key locations
Latin America
58.9
Asia Pacific61.1
EMEAMENA
9.9Global
9.2
Equity39.9
Fixed Income
76.3
Balanced17.3
Alternative0.8
Liquidity4.8
The Investment Team & Emerging Markets Investment Resources
10
New YorkGEM Fixed Income8 Investmentprofessionals
Mexico CityMexican Fixed IncomeMexican EquityMexican Alternatives11 Investmentprofessionals
BogotaColombian Fixed IncomeColombian Equity5 Investmentprofessionals
Sao PauloBrazilian Fixed IncomeBrazilian EquityBrazilian AlternativesBrazilian Multimanager21 Investmentprofessionals
Buenos AiresArgentinian Fixed IncomeArgentinian Equity5 Investmentprofessionals
LondonGEM EquityGEM AlternativesGEM Multimanager13 Investmentprofessionals
ParisGEM Fixed IncomeGEM Equity (inc Amanah)9 Investmentprofessionals
IstanbulTurkish Fixed IncomeTurkish EquityTurkish Alternatives10 Investmentprofessionals
RiyadhSaudi Fixed Income (inc
Amanah)Saudi EquitySaudi Alternatives18 Investmentprofessionals
Mumbai Indian Fixed Income Indian Equity19 Investmentprofessionals
SingaporeSingaporean Equity7 Investmentprofessionals
Hong KongHong Kong Fixed IncomeHong Kong EquityHong Kong Alternatives37 Investmentprofessionals
Shanghai Jintrust Chinese Fixed
Income Jintrust Chinese EquityChinese M ultimanager17 Investmentprofessionals
TaipeiTaipei Fixed IncomeTaipei Equity23 Investmentprofessionals
19464
Emerging markets investment capabilities –
A portfolio of opportunities Strategies and locations
As of June 2011
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11-IB-10022
Investment Team
Source: HSBC Global Asset Management. Data as of July 2011* Years of industry experience are denoted in the brackets(xx) indicates the total number of investment professionals
Bill Maldonado[18yrs]*
Chief Investment Officer, Asia-Pacific
Strategy Chief Investment Officer, Equities
Weekly Local team meetings
Asia Forum Portfolio construction meetings Research meetings Country specialist meetings
Lead Portfolio ManagerSanjiv Duggal [20yrs]*
Indian Equity Portfolio Managers / Research Analysts (4)
Viresh Mehta [20yrs]*Nilang Mehta [15yrs]*
Divya Balakrishnan [6yrs]*Deborah Yeo [3yrs]*
Indian Equity Team
Monthly portfolio review meeting
Regional Portfolio Construction and
Quantitative Research (5)
Product Management (1)
Dealing (6)
Investment SupportRegional Sector Analysts (7)
Weekly GEM Forum
Local Indian Equity team (11)
Research Insights
Monthly BRIC Forum
12
Key Manager 1: 15+ years at HSBC
Key Manager 2: 8+ years at HSBC; 5 key members of team first worked together in 2004
A large dedicated and experienced team manages US$9.6bn of dedicated Indian equity strategies
High conviction ideas generated from in-house research
Disciplined, valuation driven investment process
Data as of March 2011
Name Role Years of experience with the Group
Years of industry experience
Indian Portfolio Management Team (Country Specialist – India)
Sanjiv Duggal Fund Manager 15 20Viresh Mehta Fund Manager 9 19Nilang Mehta Fund Manager 7 15Divya Balakrishnan Equity Analyst 6 6Deborah Yeo Equity Analyst 3 3Sector AnalystsHugh Lee Financials 5 15Patrick Crivelli Consumers 5 9Mathew Lee Property 5 11Sami Abouzahr Industrials 6 6Kwok Wing Cheong Industrials 5 21Ferdinand Cheuk Technology <1 15Quantitative Analysis & Implementation UnitAndrew Lee Quantitative Analysis and Portfolio
Implementation6 16
DealersJames Levy Head of Dealing, Asia Pacific <1 14Florence Hsieh Head of Dealing 17 21Anand
Narayan Dealer 5 20Product ManagementRoshan
Padamadan Product Specialist 5 7
India Equity Team
13
Indian Equity Capabilities
Indian Equity India Alpha Fund
Objective
To be in the Top 1/3 of peers on a rolling 3-year basis
To achieve 20%-25% gross return# in USD per annum
Benchmark
IFC Investable India
N/A
Typical number of holdings
60-100
40-80
Ex-ante tracking error
4%-12%
N/A
Style Bias
Blend of growth and value
N/A
Investment vehicles
Separate account, HGIF*
Cayman Island funds** (USD, EUR, GBP)
US onshore vehicles
Strategy AUM as of 31 March 2011
US$ 8,273million
US$ 157million
Minimum separate account size
US$ 5,000 (or equivalent)
US$100.000 (or equivalent)
Minimum revenue for separate account
US$ 300,000
N/A
Strategy inception
2 April 1996
1 April 2007
Source: HSBC Global Asset Management * HGIF represents HSBC Global Investments Funds, which is HSBC's
global flagship fund range domiciled in Luxembourg.** Cayman Island funds represents The fund is regulated by CIMA (Cayman Island Monetary Authority).# Returns will be reduced after deduction of fees.Objectives and performance characteristics are not guaranteed. For illustration purpose only and does not constitute investment advice.
Investment Philosophy and Process
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Investment Philosophy
We believe that the Indian equity market is inefficient, and that it can stay inefficient for some time
The Indian market is sentiment and rumour/noise driven in the short term
The Indian market can be volatile due to the large options and futures markets
The above factors coupled with momentum can cause severe market distortions at sector and stock levels
Inherent value will be recognised by the market over time, eliminating mis-pricing, thus allowing us to deliver superior returns
Business cycle investing gives a blend of value and/or growth sectors
We are not swayed by rumour, noise and momentum and focus on implementing our investment process in a disciplined manner to exploit the above inefficiencies
We do not believe in overpaying for good companies
16
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Stock Analysis
Continuous assessment of:•
Risk limits and guidelines•
Tracking error and active bets
•
Liquidity of individual stocks and overall portfolio
•
Independent and external risk monitoring
Implement investment ideas based on
•
Sector and thematic views –
active bet size•
Upside to relative and absolute fair value
•
Stock conviction level –
active bet size
•
Risk limits and client guidelines
Typical portfolio is 40 -80 positions.
•
Formulate view on Indian and Global business and economic cycles
•
Identify structural drivers of Indian economy
•
Evaluate changes in Government policy
•
Review global competitiveness
Sectors / themes•
Global vs domestic•
Growth, cyclical vs defensive, value
•
Globally competitive sectors / industries
Qualitative Inputs:•
Industry dynamics •
Business model•
Management quality / strategy
•
Competitive advantage •
Corporate Governance trends
•
Expectations analysis
Quantitative Inputs:•
Screening of various market and valuation criteria
Risk MonitoringPortfolio Construction
Output: Sector / Theme
PositioningOutput:
Stock IdeasOutput:
Client PortfolioOutput:
Assessment of Portfolio Positions
Business Cycle Analysis
Source: HSBC Global Asset Management
Investment Process Overview
11-IB-10022
17
Evaluate the Indian and global business cycle and determine cyclical directions–
Focus on inflection points
Identify structural drivers of the Indian economy–
Changes in government policy, for example, privatisation in 2001
& 2002
–
Demographics
Review global competitiveness of Indian sectors–
Software services, generic pharmaceuticals, metals, refining, manufacturing
Evaluate the sectors and themes that will benefit from the above
assessment
Review sector / theme valuations
Source: HSBC Global Asset Management
Investment Process -
Business Cycle Analysis (1) Formulate sector & thematic positioning
11-IB-10022
18
Indian Cycle
Global Cycle
Growth biasedCyclical Growth, Commodity Cyclicals
Government Policy
Secular/ Structural opportunities
Value biasedDefensive Growth
India Investment Process Business Cycle Investing
Investment Process -
Business Cycle Analysis (2) Unique and disciplined investment process to identify and capture opportunities
Source: HSBC Global Asset Management
11-IB-10022
19
The in-depth Stock Analysis combines qualitative and quantitative analysis
The qualitative analysis is based on individual assessment of:
–
Industry dynamics
–
Business model
–
Management quality / strategy
–
Competitive advantage within sector
–
Return on / use of capital
–
Cash flow generation, earnings growth
–
Corporate Governance trends
–
Expectations analysis
Quantitative input:
–
Screen for liquidity and market capitalisation
–
Screen for relative and absolute valuations
Source: HSBC Global Asset Management
Investment Process -
Stock Analysis (1) In-depth analysis of stocks
20
11-IB-10022
Investment Process -
Stock Analysis (2) Qualitative assessment
For illustrative purposes only and does not constitute any investment recommendation to buy or sell the above-mentioned securities.
Source: HSBC Global Asset Management
Driver Focus
Management Effective management
Strategy
Defined strategy for earnings growth, cash flows and returns on capital
Advantage
Identifiable competitive advantage within sector
Operations/Financials
Efficient operations contributing to financial strength
Valuation
Compare market price to valuation
Corporate Governance
Focus on corporate governance trend
11-IB-10022
21
Implement investment ideas based on
–
Sector and thematic views –
active bet size
–
Upside to relative and absolute fair value
–
Stock conviction level –
active bet size
–
Risk limits and client guidelines
Typical portfolio is 40-80 stocks
Source: HSBC Global Asset Management
Investment Process Construct optimal long portfolio within defined trading limits
11-IB-10022
22
The portfolio is monitored by independent risk monitoring teams
External risk monitoring is overseen by an independent Risk Management department within HSBC Global Asset Management
The team continuously monitors the following:
–
That the portfolio is in line with Risk Limits and Client Guidelines
–
Tracking error of portfolio
–
Contribution from sectors and stocks to total risk
–
Underlying liquidity of individual holding to ensure sufficient liquidity for the portfolio
Source: HSBC Global Asset Management
Investment Process Monitor portfolio positions and adjust if necessary
Risk Management
24
Framework
Investment Team Operational Control Parent Oversight
Portfolio Manager Risk Guidelines and Portfolio Constraints Market Risks
Trading Desk Pre-trade compliance
Coherence of orders
Counterparty risks
Market risks
Risk Control Front-end Systems
Clients guidelines
In-house risk limits
Regulatory guidelines
Management Assistance Operational risk control
Transaction Review Committee
Internal Control/Compliance Process control
HSBC’s Risk Management and Audit Control of processes (including Risk Control Processes)
Follow up of risk control activities
The team is supported by a well proven Risk Management Framework which is put into place to comply with the identified risks characterising investments in the Indian market.
Source: HSBC Global Asset Management, Information is for illustrative purposes only.
Risk Management Framework
25
11-IB-10022
The long portfolios are constructed typically taking the following risk limits into consideration
Source: HSBC Global Asset Management. For illustrative purposes
onlyBenchmark is a customised BRIC Index (25% MSCI Brazil, 25% MSCI Russia, 25% MSCI India, MSCI China) This is the current internal
benchmark, which may change and is not detailed in the fund's prospectus. This benchmark is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited
accepts no liability for any failure to meet this benchmark.
Factor
Single name exposure 10%
Cash weighting Maximum of 10%
Sector Limits
Benchmark weight0-10%10-20%>20%
Max sector exposure3x benchmark weight2x benchmark weight1.5x benchmark weight
Diversification Typical 40-80 stocks
SICAV Diversification rule Sum of all stocks which are over 5% of portfolio should be less than 40%
Tracking Error 4-12%
Risk Control Define Risk Limits
26
11-IB-10022
Sell Discipline
Portfolio managers adhere to a strict sell discipline that may be triggered by any of the following:
–
A change in our sector and thematic views driven by our investment process–
A fundamental deterioration in a stock–
Adverse changes in management and strategy–
Corporate governance deterioration–
Price target being reached (absolute or relative) and with no further appreciation expected–
Better opportunities arising in other sectors or stocks within the same sector
This discipline is based on our investment philosophy that the market will eventually recognise inherent value
27
11-IB-10022
Trade Implementation
Trade Implementation is an integral part of the investment process. The in-house dealing team’s mandate is to preserve alpha for investment decisions made by portfolio managers
Through transaction cost analysis, dealers are evaluated based on their performance against the most appropriate dealing benchmarks
The Indian Team Trade Implementation track record is the most admired within HSBC Global Asset Management
Dealer is integrated within the Investment Team and sits with the fund managers
Sample ITG Peer Analysis of Asian trading cost
Assumption: Fund AUM USD 2bn and 75% annual turnover
Average cost = 50 bps
Standard deviation = 15 bps
6550
35
10.5
15.0
19.5
Poor Execution Average Execution Good Execution
bps per trade Cost (USD million)
Source: ITG. ITG refers to Investment Technology Group, a trading service firm, on the trade implementation slide of the presentation. For illustrative purposes only.
28
11-IB-10022
Risk Management
Source: HSBC Global Asset Management. For illustrative purposes only.
Understanding and managing risk is as important as returns
Rigorous risk management, through a sophisticated approach to risk budgeting and a risk management process adhering to HSBC Group’s guidelines
•A
•B
•C
•D
Performance attributionDecomposition of RiskStyle analytics
Positioning through time
8For Professional Investors only. Not for further distribution.
Positioning over time
Value
-2.0
-1.0
0.0
1.0
2.0
Jan
2006
Apr 20
06Ju
l 200
6Oct
2006
Jan
2007
Apr 20
07Ju
l 200
7Oct
2007
Jan
2008
Apr 20
08Ju
l 200
8Oct
2008
Jan
2009
Apr 20
09Ju
l 200
9Oct
2009
Jan
2010
Apr 20
10Ju
l 201
0
Forward Growth
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
Jan 2
006
Apr 20
06Ju
l 200
6Oct
2006
Jan 2
007
Apr 20
07Ju
l 200
7Oct
2007
Jan 2
008
Apr 20
08Ju
l 200
8Oct
2008
Jan 2
009
Apr 2
009
Jul 2
009
Oct 20
09Ja
n 201
0Apr
2010
Jul 2
010
Historic Growth
-2.0
-1.0
0.0
1.0
2.0
Jan
2006
Apr 20
06Ju
l 200
6Oct
2006
Jan
2007
Apr 20
07Ju
l 200
7Oct
2007
Jan
2008
Apr 20
08Ju
l 200
8Oct
2008
Jan
2009
Apr 20
09Ju
l 200
9Oct
2009
Jan
2010
Apr 20
10Ju
l 201
0
Market Cap
-2.0
-1.0
0.0
1.0
2.0
Jan 2
006
Apr 20
06Ju
l 200
6Oct
2006
Jan 2
007
Apr 20
07Ju
l 200
7Oct
2007
Jan 2
008
Apr 20
08Ju
l 200
8Oct
2008
Jan 2
009
Apr 2
009
Jul 2
009
Oct 20
09Ja
n 201
0Apr
2010
Jul 2
010
Momentum Medium Term
-6.0
-5.0-4.0-3.0-2.0
-1.00.01.0
2.03.04.05.0
6.0
Jan 2
006
Apr 20
06Ju
l 200
6Oct
2006
Jan 2
007
Apr 2
007
Jul 2
007
Oct 20
07Ja
n 200
8Ap
r 200
8Ju
l 200
8Oct
2008
Jan 2
009
Apr 2
009
Jul 2
009
Oct 20
09Ja
n 201
0Apr
2010
Jul 2
010
Market Beta
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
Jan
2006
Apr 20
06Ju
l 200
6Oct
2006
Jan
2007
Apr 20
07Ju
l 200
7Oct
2007
Jan
2008
Apr 20
08Ju
l 200
8Oct
2008
Jan
2009
Apr 2
009
Jul 2
009
Oct 20
09Ja
n 20
10Ap
r 201
0Ju
l 201
0
29
11-IB-10022
Risk Management Three independent levels of risk management control
Source: HSBC Global Asset Management. For illustrative purposes
only.
Rigorous risk management, through a sophisticated approach to risk budgeting and a risk control process adhering to HSBC Group’s guidelines
HSBC Global Asset Management HSBC Group
Portfolio Manager
Implementation ofRisk Budgeting
Front Office tools
Risk Control TeamClients’
guidelinesIn-house risk limits
Regulatory guidelines pre and
post trade
Management Assistance
Operational risk control
Valuation ControlDaily matching of stocks and flows
Internal Control Team / Compliance
TeamProcess and
regulatory control
HSBC’s Risk Management and
AuditControl of processes
(including Risk Control Processes)
Follow up of risk control activities
Portfolio ManagerRisk guidelines and Portfolio Constraints
Market risks
Dealing DeskCoherence of ordersCounterparty risks
Investment Risk & Portfolio
Construction TeamEx-post risk metrics
Risk Budgeting
Portfolio Manager Controls
Second Level
Risk Management TeamAnalysis of process
Analysis of portfolio constraintsDetermination of indicators
Definition of risk management processClients’
guidelinesIn-house risk limits
Regulatory guidelines pre and post tradeManagement Assistance
Operational risk controlValuation Control
Daily matching of stocks and flows
First Level Third Level
Market Overview
31
Vision 2020•
Over 7% CAGR in GDP in this decade•
To remain amongst fastest growing large economies•
Nominal economy to treble in size
Favourable demographics•
India's population expected to cross China‘s by 2025 •
One of the largest labour pools plus one of the largest consumer
markets•
Rising income and aspirational levels
Improving infrastructure to support growth
Vibrant democracy ensures long-term political stability
Corruption peaking? Improving governance at State level
* For information only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document.
India = a must-have allocation for growth portfolios *
32
Valuations close to 10-year average
Source: FactSet, MSCI, Morgan Stanley, Bloomberg dated as of June 30, 2011. For illustrative purposes only and does not constitute any investment recommendation to buy or sell in the above-mentioned sectors/index. Opinions expressed herein are subject to change without notice.
Consensus forecasts for EPS growth: FY12: 19% FY13: 17%
(Source: IBES, June 30, 2011)
8
11
14
17
20
23
26
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
5 Yr Avg(16.3)
10 Yr Avg(14.4)
MSCI India 12M Fwd PE, 1995-2011MSCI India Fwd PE
June 2011 (14.5)
Nov-98
Feb 00
Sep 01 Apr 03
Dec 03
Nov 08
Dec 07
33
Great growth potential Rising GDP per capita on a PPP basis
Updated as on 23rd Mar 2011. Forecasts are indicative only and not guaranteed in any way.Source: World Economic Outlook, IMF, Deutsche Bank
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
India China
China inf le ct ion point
(US$)
India inf le ct ion point ?
India > China in 1990
China >2.2x India in 2010
3434
India vs. China great growth potential
Forecasts are indicative only and not guaranteed in any way.Source: World Economic Outlook, IMF, Deutsche Bank. as of 23 March 2011
Indian GDP growth to accelerate in decade to 2020; grow faster than China?
India’s reforms began in 1991 --
12 years after China started in 1979
Nominal GDP (US$ bn)
0
2,000
4,000
6,000
8,000
10,000
12,000Ye
ar 1
Year
2Ye
ar 3
Year
4Ye
ar 5
Year
6Ye
ar 7
Year
8Ye
ar 9
Year
10
Year
11
Year
12
Year
13
Year
14
Year
15
Year
16
Year
17
Year
18
Year
19
Year
20
Year
21
Year
22
Year
23
Year
24
Year
25
Year
26
Year
27
Year
28
Year
29
Year
30
Year
31
Year
32
Year
33
Year
34
Year
35
Year
36
Year
37
China (1979 onwards) India (1991 onwards)
China's 2009 GDP
India's 2009 GDP
35
Bullish economy in short, medium & long term Over 7% CAGR GDP growth expected over decade to 2020
Source : UBS. as of 11 Jul 2011. Data as of 31 March 2011 .Quarters are calendar year wise. Forecasts are indicative only and not guaranteed in any way. For illustrative purposes only and does not constitute investment recommendation to buy or sell
in the above-mentioned sectors.
Services which is > 60% of GDP still growing at > 9%
Poor monsoon in 2009; normal monsoon in 2010
Sharp recovery in industrial production but moderation ahead
Expect consumption to remain robust
Expect pick up in delayed investment cycle in 2nd
half FY12
Leading to strong and sustainable GDP growth for this decade
Real GDP %y/y
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jun-
08
Sep-
08
Dec
-08
Mar
-09
Jun-
09
Sep-
09
Dec
-09
Mar
-10
Jun-
10
Sep-
10
Dec
-10
Mar
-11
Jun-
11E
Sep-
11E
Dec
-11E
Mar
-12E
%y/y
-15
-10
-5
0
5
10
15
20
25
Mar
-98
Mar
-99
Mar
-00
Mar
-01
Mar
-02
Mar
-03
Mar
-04
Mar
-05
Mar
-06
Mar
-07
Mar
-08
Mar
-09
Mar
-10
Mar
-11
Mar
-12E
Agriculture
Industry
(incl. constr.)
Services
Real
GDP
36
Favourable demographics support consumption & economic growth Over 30% of population below age 15
Source : UBS as of 11 Jul 2011For illustrative purposes only and does not constitute to any recommendation to buy or sell in the above-mentioned countries
Rising aspirations of a new generation
Percentage of the population below the age of 15
13.413.5
16.417.4
18.018.4
19.520.1
25.527.0
30.6
10 15 20 25 30 35
Japan
Germany
Canada
UK
Denmark
France
China
US
Brazil
Indonesia
India
HSBC GIF Indian Equity Fund -
Overview
38
Fund type and domicile
UCITS III Luxembourg SICAV part of the HGIF range
Launch Date
04/03/1996
Base Currency
USD
Benchmark*
IFCI India
Liquidity
Daily
Minimum Investment –
Institutional Share Class
USD 1,000,000 –
Retail Share Class
USD 5,000
Fee Structure–
Institutional Share Class 0.75 % Fixed Management Fee–
Retail Share Class
1. 50 % Fixed Management Fee
Investment Vehicle
*This is the current internal benchmark, which may change and is not detailed in the fund's prospectus. This benchmark is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability for any failure to meet this benchmark.
39
Sector Weightings versus Benchmark*Sector Weightings
HSBC GIF Indian Equity Fund – Sector weightings*
Source: HSBC Global Asset Management as at 30th June 2011. * For illustrative purposes only‘.
Financials19.2%
Information Technology
16.8%
Materials12.8%
Consumer Discretionary
12.4%
Industrials10.1%
Energy8.7%
Utilities2.1%
Consumer Staples6.1%
Health Care7.9%
Cash1.8%
Telecommunication Services
1.9%
-7.75
-3.78 -3.44-1.81
-0.93
0.08
2.46 3.06 3.48
6.78
-10
-8
-6
-4
-2
0
2
4
6
8
Ene
rgy
Fina
ncia
ls
Util
ities
Tele
com
mun
icat
ion
Ser
vice
s
Con
sum
er S
tapl
es
Indu
stria
ls
Info
rmat
ion
Tech
nolo
gy
Hea
lth C
are
Mat
eria
ls
Con
sum
erD
iscr
etio
nary
40
Source: HSBC Global Asset Management as at 30th June 2011. * For illustrative purposes only‘. the above material is for information only and does not constitute any recommendation to buy or sell any investments.
HSBC GIF Indian Equity Fund – Overview individual stock exposures*
Top 5/Bottom 5 versus Benchmark**Top 10 Holdings
Company Sector Portfolio Weight %
HCL Technologies Information Technology 9.67
Maruti Suzuki Consumer Discretionary 8.75
Cairn Energy Energy 7.56
Jindal Steel & Power Materials 6.82
State Bank of India Financials 4.37
United Spirits Ltd. Consumer Staples 4.07
Sterlite Industries Materials 4.05
ICICI Bank Financials 3.68
Mahindra & Mahindra Consumer Discretionary 3.37
Dr. Reddy's Laboratories Health Care 3.33
Top 5 and Bottom 5 Relative weight (%)
HCL Technologies 9.19
Maruti Suzuki India 8.29
(*) Cairn Energy 7.56
Jindal Steel & Power 5.40
United Spirits 3.63
(**) Oil & Natural Gas Corp. -3.28
(**) HDFC Bank -3.34
(**) Housing Development Finance Corp. L -4.47
Infosys -7.09
(**) Reliance Industries -8.39
(*) Stock is not included in Benchmark (**) Stock is not held by Portfolio
41
Source: Morningstar as of 30th June 2011. *Past performance is net of fees, bid-bid, USD. It is for illustrative purposes only, and should not be relied on as indication for future returns.
Performance Net –
AC Share Class
0
500
1000
1500
2000
2500
3000
Feb-
96
Feb-
97
Feb-
98
Feb-
99
Feb-
00
Feb-
01
Feb-
02
Feb-
03
Feb-
04
Feb-
05
Feb-
06
Feb-
07
Feb-
08
Feb-
09
Feb-
10
Feb-
11
HSBC GIF Indian Equity AC USD S&P/IFCI India TR USD
Rolling time 30/06/2005 to 30/06/2006
30/06/2006 to 30/06/2007
30/06/2007 to 30/06/2008
30/06/2008 to 30/06/2009
30/06/2009 to 30/06/2010
30/06/2010 to 30/06/2011
HSBC GIF Indian Equity Fund 36.12 58.82 -0.85 -21.54 38.22 -1.69
As at 30 June 2011 1 M 3 M 6 M 1 Y 3 Y 5 Y
HSBC GIF Indian Equity Fund -2.00 -5.30 -12.76 -1.69 6.62 67.90
Benchmark 1.35 -3.05 -8.81 5.30 33.28 94.20
Calendar years 2011 YTD 2010 2009 2008 2007 2006
HSBC GIF Indian Equity Fund -12.76 13.00 131.55 -70.26 77.92 45.95
Benchmark -8.81 19.84 95.06 -63.69 80.43 48.79
42
Quarterly Performance attribution – Sector31/03/2011 to 30/06/2011
Source: HSBC Global Asset Management as of 30th June 2011. It is for illustrative purposes only, and should not be relied on as indication for future returns.
Top 5 sector Port. Avg Weight
BM Avg Weight
Allocation Effect
Selection + Interaction Total Effect
Information Technology 15.47 14.58 0.05 0.83 0.88
Energy 9.36 17.11 0.47 -0.28 0.20
Telecommunication Services 2.30 3.57 -0.09 0.14 0.05
Industrials 10.48 10.06 0.04 0.00 0.04
Materials 12.48 9.64 -0.07 0.06 -0.01
Bottom 5 sector Port. Avg Weight
BM Avg Weight
Allocation Effect
Selection + Interaction Total Effect
Utilities 2.68 5.68 0.11 -0.12 -0.01
Health Care 8.26 4.69 0.32 -0.53 -0.20
Consumer Discretionary 12.90 5.52 0.48 -1.04 -0.57
Consumer Staples 5.71 6.49 -0.10 -0.64 -0.73
Financials 18.19 22.66 0.07 -1.51 -1.45
43
Source: HSBC Global Asset Management as of 30th June 2011. It is for illustrative purposes only, and should not be relied on as indication for future returns. the above material is for information only and does not constitute any recommendation to buy or sell any investments.
Quarterly Performance attribution – Stock31/03/2011 to 30/06/2011
Top 5 stock Portfolio Weight
Benchmark Weight
Relative weight Total Effect
HCL Technologies Ltd. 9.67 0.47 9.19 0.58
Maruti Suzuki India Ltd. 8.75 0.47 8.29 -0.52
Cairn Energy PLC 7.56 0.00 7.56 -0.56
Jindal Steel & Power Ltd. 6.82 1.42 5.40 -0.18
State Bank of India 4.37 1.78 2.59 -0.21
Bottom 5 stock Portfolio Weight
Benchmark Weight
Relative weight Total Effect
Unitech Ltd. 3.01 0.26 2.75 -0.59
Cairn Energy PLC 7.56 0.00 7.56 -0.56
Maruti Suzuki India Ltd. 8.75 0.47 8.29 -0.52
Hindustan Unilever Ltd. 0.00 2.14 -2.14 -0.39
Rural Electrification Corp. Ltd. 2.04 0.27 1.77 -0.37
Competitor Analysis
45
Competitor Analysis
Fund Name Data in USD Million as of May 2011 AUM
3 months net sales
12 months net sales to May
20112010 net
sales 2009 net
sales2008 net
sales2007 net
sales
HSBC GIF Indian Equity 5,614 -197 -881 -365 877 -973 -894
Lipper FMI Equities India Sector Total 41,711 -1,124 -979 33 3,085 -197 1,312
Source: Morningstar Direct, Lipper FMI, June 2011
Comparative Advantage
►
The fund sits in the top decile
in 2009
►
Lipper FMI Equities India sector had -$979m outflows 12 months to May 2011
►
HSBC Indian Equity Fund has AUM $5.6bn with -$881m outflows in the past 12 months
46
Competitor Analysis
Source: Morningstar Direct, Lipper FMI, June 2011
Outlook
48
Net foreign direct & portfolio investments
Source: RBI, SEBI, Motilal Oswal. FDI is excl acquisitions and 2QCY11 QTD FDI is as of 30 April 2011 and 3QCY11 QTD FII and DII is as of 7 July 2011.
For illustrative purposes only and does not constitute any investment recommendation to buy or sell in the above-mentioned sectors.
Big contrast
New FDI inflows likely in retail, insurance, aviation, banking, etc when FDI restrictions are relaxed
Pharma sector limits to be tightened?
49
Source: SEBI, NSE, Motilal Oswal. as of 7 July 2011For illustrative purposes only and does not constitute any investment recommendation to buy or sell in the above-mentioned index.
Who is right in the flow fight? Daily institutional flows
50
80
90
100
110
120
130S
ep-1
0
Oct
-10
Oct
-10
Nov
-10
Nov
-10
Dec
-10
Dec
-10
Jan-
11
Jan-
11
Feb-
11
Feb-
11
Mar
-11
Mar
-11
Apr
-11
Apr
-11
May
-11
May
-11
Jun-
11
Jun-
11
S&P 500 Dollex
Source: Bloomberg. Data as of 29 June 2011. Chart rebased to 100 on 30 September 2010.For illustrative purposes only and does not constitute any investment recommendation to buy or sell the above-mentioned indices
QE II was announced in November 2010, while expectations started
building in October. From the period starting 30 September 2010 –
29 June 2011, India has lost over 22% to the S&P 500 in relative terms.
A study in contrast India underperforms the US by over 22% in recent months; was over 30% in February
QE II announced
51
Export growth in Asia: who is leading the pack? India reacts with faster export growth in Q1 CY2011
Source: CEIC, Bloomberg, Morgan Stanley Research. Data as of 30 June 2011. For illustrative purposes only and does not constitute any investment recommendation to buy or sell the above-
mentioned sectors/countries.
Exports growth, YoY, 3-month moving average
-40%
-20%
0%
20%
40%
60%
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11
China India Korea Taiwan
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
India China Korea Singapore Taiwan
Q3 (Pre QEII) Q4 (Post QE II)Q1 2011 (Post QEII) Apr-May 2011 (Post QEII)
52
0%10%20%30%40%50%60%70%80%90%
Singapore Hong Kong Indones ia Malays ia China Korea India Taiwan
020406080
100120140160180200
Hong Kong Singapore Malaysia Indonesia Korea China India Taiw an
Source: Bloomberg, MSCI, Datastream. Updated as of 30 June 2011 Export/USD-denominated sectors are commodities, energy, pharmaceuticals and
technology. Expected revenues for FY12/CY11 are used as per reporting year of companies, and are consensus estimates from Bloomberg. MSCI Indices for various countries are used, as of May 31, 2011. For illustrative purposes only and does not constitute any investment recommendation to buy or sell the above-mentioned sectors/countries.
Contrary to common perception, the Indian market is the second most exposed major economy in Asia to exports, in both revenue and profits
2011 revenue share from Export/USD-denominated sectors for FY12/CY11
2010 Exports as % of GDP
India is close to the head of the pack Revenue share of export-oriented sectors in Asia
53
Source: CLSA Asia-Pacific Markets as 28th February 2011. *Unique Identification Authority (India)
Fiscal deficit for FY12 targeted at 4.6% (FY11 estimated at 5.2%)
Fiscal deficit targeted to be brought down to 3.5% by FY14
Assumed nominal GDP growth of 14% appears conservative
Moderate tax rates and simplify system, introduce Direct Taxes Code and Goods and Services Tax
Focus on infrastructure and manufacturing
Reforms to continue
Liberalise
FDI policy
Guidelines on new banking licenses to be issued
Continue divestment
Roll out of UID*
Direct transfer of cash subsidies
FY12 Union Budget –
The Inclusive Growth Mantra
54
Inflation –
a concern being addressed
Outlook: we expect RBI to raise policy rates by 25-50 bps by March 2012
Food wastage: 40% of fruit and vegetable production wasted (Budget Speech)
Source: CLSA Asia Pacific Markets, RBI, Bloomberg. Data as of 10 July 2011. Forecasts by HSBC Global Asset Management (Singapore) Limited. Forecast is not necessarily indicative of future performance.
Growth Expectation Inflation forecast
RBI 8% 6% +
Our View 7.5-8% 7.5-8%
55Source: CLSA Asia-Pacific Markets as 30 April 2011
Multiple corruption / bribery issues affected market sentiment in recent months
2G Telecom ‘scandal’
from early 2008
New Delhi Commonwealth Games
Raids on financial institutions in 4th
quarter 2010
Food, fertiliser
and fuel subsidy losses
Leakage to be reduced substantially by Unique Identification (UID) numbers
UID Benefits Increase Financial inclusion
At least 50% of adult Indians have no bank account
Subsidy reduction and targeting of benefits
Over US$200bn of subsidies to be given over next five years. Cash transfers -
more efficient
Tracking transactions
Better tax administration
Corruption
56Source: UIDAI = Unique Identification Authority in India, CLSA Asia-Pacific Markets. Actual data up to March 2011, CLSA estimates thereafter
-
100
200
300
400
500
600
700
Aug-10 Oct-10 Dec-10 Feb-11 Aug-11CL Aug-13CL Aug-15CL
mCumulative enrollments
France
France + Germany
European Union
France + Germany + Russia
Russia + Brazil
Path to UID implementation
57
Building up Infrastructure
Source: CSO, Citi Investment Reseatch
Estimates, March 2011
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
FY60
FY62
FY64
FY66
FY68
FY70
FY72
FY74
FY76
FY78
FY80
FY82
FY84
FY86
FY88
FY90
FY92
FY94
FY96
FY98
FY00
FY02
FY04
FY06
FY08
FY10
FY12
E
FY14
E
Gross Capital Formation Gross Fixed Capital Formation
%YoY
Investments have slowed due to global crisis, tough stance taken
by the Environment Minister, corruption / bribery issues, Cabinet Minister changes, lack of policy clarity
Investments to pick up post monsoon:
Environment Minister clearing projects
Positive Ministerial changes
Budget focus
Trends in Investments (%YoY)
58
Infrastructure investment at an inflection point
12th Plan investment targeted at >USD 1,000Bn
Infrastructure investment in 11th Plan representing ~2.3x increase over 10th Plan period.
Preliminary estimates for 12th Plan indicates an increase of ~2x
from 11th Plan and 4.5x from 10th Plan period
Infrastructure spend expected to reach 10% of GDP in 12th Plan, up from 7.6% in 11th Plan and 5.1% in 10th Plan
Source: Planning Commission Motilal
Oswal. as at 24 March 2011. For illustrative purposes only and
does not constitute any investment recommendation to buy or sell the above-mentioned sector
227
514
1,025
0
200
400
600
800
1,000
1,200
10th Plan actual 11th Plan revised 12th Plan target
2.3x
4.5x
5 year periods ending 31 March 2007, 31 March 2012, etc
59
1.5
31.3
64.470.4
77.3
88.7
108.2
0
20
40
60
80
100
120
Germany Australia USA UK Brazil France India
In high spirits (1) Shift from local liquor to branded liquor is seen
150m people to reach drinking age in next 5 years –
30% higher than existing base of
~485m
Source: Euromonitor, January 2011.For illustrative purposes only, and does not constitute any recommendation to buy or sell in the above-mentioned countries.
Rising aspirations and disposable incomes underpinning growing alcohol consumption,
and move up the brand chain
Beer (litres/capita)
60
1.7
6.3
2.9
5.25.45.7
7.1
012345678
Brazil France Germany USA UK Australia India
In high spirits (2) Shift from local liquor to branded liquor is seen
Spirits (litres/capita)
39.1
0.02.3
8.7
19.723.4
26.2
05
1015202530354045
France Germany UK Australia USA Brazil India
Wines (litres/capita)
Source: Euromonitor, January 2011.For illustrative purposes only, and does not constitute any recommendation to buy or sell in the above-mentioned countries.
61
Housing remains affordable –
overweight real estate
Demographics, urbanisation, rising income & aspirational levels, big shortage of good quality housing
Source: HDFC, Motilal Oswal. Data updated as of 21 March 2011 (Data is updated on quarterly basis)For illustrative purposes only and does not constitute any investment recommendation to buy or sell the above mentioned sector or security.
15.6
11.1
8.36.6 5.9 5.3 5.1 4.3 4.6 5.0 5.1 5.0 4.5 4.7
4.7
22.0
0
5
10
15
20
25FY
95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
0.0
0.8
1.6
2.4
3.2
4.0Property Cost -
RHS Annual Income -
RHS Affordability -
LHS
No
of T
imes
INR
mn
62
Investment spend delayed due to government inaction and tight monetary policy
Consumption to remain bouyant; near normal monsoon forecast
Corruption issue has peaked –
UID scheme will reduce subsidy losses
Closely monitor government action on policy and reforms
Monitor trends in crude oil
Monitor relative and absolute market valuations
Conclusion
For illustrative purposes only and does not constitute investment recommendation to buy or sell in the above-mentioned sectors and commodities.
Appendix
64
Sanjiv Duggal – Fund Manager
Sanjiv
joined HSBC in April 1996 and is responsible for the management
of Indian equities. With over 16 years of investment experience, Sanjiv
has been involved in running the flagship HSBC GIF Indian Equity Fund since he joined. Prior to joining HSBC, Sanjiv
worked for the Hill Samuel Group where he spent nearly five years, initially in internal audit and latterly as an Emerging Markets fund manager.
Sanjiv
is a fully qualified Chartered Accountant.
Viresh Mehta – Fund Manager
Viresh
is a fund manager in the Indian equity team and has been working in the industry since 1992. Viresh
was recruited to HSBC Global Asset Management India in 2002 by Sanjiv. He relocated to Singapore in 2006. Prior to joining the firm in 2002, Viresh
was the head of dealing and sales trading with UBS Warburg Securities, India. He has also had prior experience in servicing institutional investors at Prabhudas
Lilladher
Limited and DSP Financial Consultants Limited. He holds a Bachelor’s degree in Engineering and an MMS in Finance, both from University of Bombay.
Nilang Mehta – Fund Manager Nilang
was recruited to HSBC Global Asset Management India in 2004 by Sanjiv. He relocated to Singapore in August 2009. He has been in the financial industry since 1996, starting out as a Senior Auditor. He holds a Masters degree in Commerce from University of Mumbai and is also
a fully qualified Chartered Accountant and a CFA charter holder.
5 team members who worked together at HSBC Global Asset Management (India) Limited. As at 31 March 2011
Investment team continuity over 14+ years 5 key people who first worked together in 2004
65
Divya Balakrishnan – Investment Analyst
Divya
is assisting the fund management team in researching sectors and stocks for their portfolio. She joined HSBC Singapore in July 2005 as a Management Associate, prior to joining Asset Management in Dec 2007. She holds a Bachelor's degree in Electrical Engineering from the National University of Singapore and is currently a Level 3 CFA candidate.
Deborah Yeo – Investment Analyst
Deborah is assisting the fund management team in researching sectors and stocks for their portfolio. She has been with HSBC since October 2008. She started her career with HSBC in London where she was on the global graduate programme supporting the GEM Equity team, Wholesale and
the Institutional Sales team on her rotations. She relocated to Singapore in 2010. She holds a MSc Finance degree from Tanaka Business School, Imperial College London, a Bachelor’s degree in Electrical Engineering from the National University of Singapore and is currently a Level 2 CFA candidate.
Anand Narayan – Dealer
Anand
is the Dealer for the team and is based in Singapore. Anand
was recruited to HSBC Global Asset Management India in August 2004 by Sanjiv. He relocated to Singapore in October 2008. Anand
worked at HSBC Asset Management in India earlier with Sanjiv, Viresh, Nilang
and Nancy. He has worked in this industry since 1991. He holds a Master’s Degree in Financial Management from Narsee
Monjee
Institute of Management Studies (Mumbai), and a Bachelor’s degree in Commerce from the University of Mumbai.
5 team members who worked together at HSBC Global Asset Management (India) Limited. As at 31 March 2011
Investment team continuity over 14+ years 5 key people who first worked together in 2004
66
Nancy Lobo – Business ManagerNancy is the Business Manager and has been working in the Mutual
Fund industry since 2002. Nancy was recruited to HSBC Global Asset Management India in January 2004 by Sanjiv. She relocated to Singapore in February 2007.
Prior to re-joining the firm in 2007, Nancy worked at HSBC Asset Management in India earlier with Sanjiv
& Viresh
and at Lotus India AMC as Sr. Manager -
Institutional Sales. She holds a Bachelor’s degree in Economics (Honors) and Master’s degree in Marketing Management, both from University of Mumbai.
Singapore Support Team
Wendy Lim – Team CoordinatorWendy is the Team Coordinator. She joined HSBC Global Asset Management (Singapore) Limited in April 2010 and has been with HSBC since 2004. She has a Bachelor’s degree in Management (Honours) from the University of London.
Roshan Padamadan – Product Specialist Roshan
joined HSBC in 2006. He became the Product Specialist for South
and Southeast Asian Equities in June 2010, based out of Singapore. He has previous experience in Macro Investment Research, Credit Risk analysis and Project Management. He holds a Bachelor’s degree in Industrial Engineering from Anna University, India and an MBA from the Indian Institute of Management, Ahmedabad. He also holds the CFA charter, and the FRM and CAIA designations.
5 team members who worked together at HSBC Global Asset Management (India) Limited. As at 31 March 2011
Investment team continuity over 14+ years 5 key people who first worked together in 2004
67
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ensure the accuracy of this presentation but HSBC Global Asset Management (UK) Limited accepts no responsibility for any errors or omissions contained therein. This presentation and any issues or disputes arising out of or in connection with it (whether such disputes are contractual or non-contractual in nature, such as claims in tort, for breach of statute or regulation or otherwise) shall be governed by and construed in accordance with English law.The views expressed above were held at the time of preparation and are subject to change without notice.Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability for any failure to meet such forecast, projection or target.The value of investments and any income from them can go down as
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invested. Where overseas investments are held the rate of currency exchange may cause the value of such investments to go down as well as up.HSBC GIF Indian Equity Fund is a sub-fund of the HSBC Global Investment Funds, a Luxembourg domiciled
SICAV. UK based investors in HSBC Global Investment Funds are advised that they may not be afforded some of the protections conveyed by the provisions of the Financial Services and Markets Act 2000. HSBC Global Investment Funds is recognised in the United Kingdom by the Financial Services Authority under section 264 of the Act. The shares in HSBC Global Investment Funds have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to United States Persons. All applications are made on the basis of the current HSBC Global Investment Funds Prospectus, simplified prospectus and most recent annual and semi-annual reports, which can be obtained upon request free of charge from HSBC Global Asset Management (UK) Limited, 8 Canada Square, Canary Wharf, London, E14 5HQ. UK, or the local distributors. Investors and potential investors should read and note the risk warnings in the prospectus and relevant simplified prospectus. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in established
markets. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries in which they trade.Brokerage commissions, custodial services and other costs relating to investment in Emerging Markets generally are more expensive than those relating to investment in more developed markets. Lack of adequate custodial systems in some markets may prevent investment in a given country or may require a
sub-fund to accept greater custodial risks in order to invest, although the Custodian will endeavour to minimise such risks through the appointment of correspondents that are
international, reputable and creditworthy financial institutions. In addition, such markets have different settlement and clearance procedures. In certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. The inability of a sub-fund to make intended securities purchases due to settlement problems could cause the sub-fund to miss attractive investment opportunities. Inability to dispose of a portfolio security caused by settlement problems could result either in losses to a sub-fund due to subsequent declines in value of the portfolio security or, if a sub-fund has entered into a contract to sell the security, could result in potential liability to the purchaser.
Important information
68
MSCI Index – The MSCI information may only be used for your internal use, may
not be reproduced or redisseminated
in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an ‘as is’
basis and the user of this information assumes the entire risk of any use it may make or permit to be made of this information. Neither MSCI, any of its affiliates or any other person involved in or related to compiling, computing or creating the MSCI information (collectively, the ‘MSCI Parties’) makes any express or implied warranties or representations with respect to such information or the results to be obtained by the use thereof, and the MSCI Parties hereby expressly disclaim all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential or any other damages (including, without limitation, lost profits) even if notified of, or if it might otherwise have anticipated, the possibility of such damagesThe risk also exists that an emergency situation may arise in one or more developing markets as a result of which trading of securities may cease or may be substantially curtailed and prices for a sub-fund’s securities in such markets may not be readily available.Investors should note that changes in the political climate in Emerging Markets may result in significant shifts in the attitude
to the taxation of foreign investors. Such changes may result in changes to legislation, the interpretation
of legislation, or the granting of foreign investors the benefit of tax exemptions or international tax treaties. The effect of such changes can be retrospective and can (if they occur) have an adverse impact on the investment return of shareholders in any sub-fund so affected.This sub-fund invests predominantly in one geographic area; therefore any
decline in the economy of this area may affect the prices and value of the underlying assets. Stockmarket
investments should be viewed as a medium to long term investment and should be held for at least five years. Any performance information shown refers to the past and should not be seen as an indication of future returns.To help improve our service and in the interests of security we may record and/or monitor your communication with us.HSBC Global Asset Management (UK) Limited provides information to Institutions, Professional Advisers and their clients on the investment products and services of the HSBC Group. This presentation is approved for issue in the UK by HSBC Global
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by the Financial Services Authority. www.assetmanagement.hsbc.com/ukCopyright ©
HSBC Global Asset Management (UK) Limited 2011. All rights reserved. 20869/082011/FP11-1558
Important information (cont’d)
