Austria's economy – a positive surprise
28.06.2017
Raiffeisen RESEARCH published the two capital market strategies "Austria & CEE " and "Global Markets" for the third quarter of 2017
Austria's economy – a positive surprise
- • Austria with strongest growth since 2011
- • Upswing in CEE is growing
- • Inflation dynamics temporarily weakening
- • ATX: Focus back on Austria
On 28 June 2017, Raiffeisen RESEARCH, an organizational unit of Raiffeisen Bank International AG (RBI), published the two capital market strategies "Austria & CEE1 and "Global Markets" for the third quarter of 2017. At a press conference, chief analyst Peter Brezinschek and Bernd Maurer, chief analyst of Raiffeisen Centrobank AG (RCB), both paid particular attention to the surprisingly strong economic development in CEE as well as the inflation trend.
“GDP figures for the first quarter have positively surprised in several countries of Central and South Eastern Europe. Romania, Poland, Hungary and the Czech Republic in particular posted strong growth. Austria also reported increasing growth dynamics and left the euro area behind for the first time in many years. As a result, we have moderately raised our GDP forecasts for 2017 as a whole. With a GDP increase of 2.2 per cent, Austria should have the strongest growth since 2011,” says Brezinschek.
CEE started strongly into the year
In Central Europe (CE), mood indicators such as the purchasing managers' indices (PMI) have reached a level in the first half of the year which indicates a more distinct economic growth. On average, the PMI for Poland, Hungary and the Czech Republic reached almost 56 points year to date, well above the neutral 50 points. The optimism of entrepreneurs in Germany, where the purchasing managers' index has risen to nearly 60 points, is supportive. The composition of recent growth is broadly based on rising private household demand, investment growth (especially in Hungary) and foreign trade (especially in the Czech Republic and Slovakia). "This development has prompted us to increase our average growth forecast for the CE region for this year from 3.1 per cent to 3.6 per cent. We are also expecting growth of over 3 per cent for the coming year, "says Brezinschek.
The situation is similar in South-East Europe (SEE). The largest economy in the region – Romania – is booming. Above all, domestic consumption is driving the economy. While economic dynamics remain unbroken in Bulgaria, the momentum of growth on the West Balkans is diminishing. Both in Serbia and Croatia, slightly lower growth rates were achieved compared to the previous quarter. In Croatia, the bankruptcy of Agrokor, the country's largest company, also weighs on growth prospects. "We therefore reduced the forecast for Croatia for the current and next year by 0.5 percentage points. Nevertheless, our economic forecast for the SEE region continues to rise overall, from 3.7 per cent to 4.1 per cent in 2017. We also expect strong growth of 3.5 per cent for 2018, "explains Brezinschek.
In Eastern Europe (EE), the end of the recession in Russia is particularly noteworthy. “We have not yet adjusted our growth forecast for the full year 2017, leaving it at 1.0 per cent, but it is possible that this value will be exceeded. The latest data releases for May indicate a strong second quarter. The economic situation is also brightening up in Belarus. While we had expected a recession only three months ago, the economy has now returned to weak growth. Only in Ukraine have the prospects somewhat dimmed based on the economic blockade of the Donbass. All in all, as far as the economic outlook for the EE region is concerned, we stick to a modest economic recovery of 1 per cent in 2017 with an upward trend in 2018, “says Brezinschek.
Austria's upswing is gaining in breadth
The cyclical dynamic in Austria accelerated again at the beginning of the year. The annual growth rate of 2.3 per cent recorded in the first quarter, compared with the previous year, was as high as in spring 2011. Private consumption also developed comparatively dynamically at the beginning of the year. As in the previous quarters, gross fixed capital formation also supported quarterly growth in the first quarter. A positive contribution to growth also came from foreign trade, as exports were again benefiting from a positive external economic environment following a disappointing development in 2016. In addition to the positive cyclical dynamics of the past quarters, the outlook for the coming months continues to be favorable. Both the purchasing managers' index for the manufacturing sector and the economic confidence determined by the EU Commission recently recorded above average for the first quarter, which in itself suggests another rebound in the cyclical pace. "Against the backdrop of the solid economic development of the past quarters as well as the positive outlook, we have raised our GDP growth forecast for the full year 2017 from 1.7 per cent to 2.2 per cent (2018: from 1.5 per cent to 1.7 per cent). The Austrian economy would therefore record the highest annual growth since 2011 (2.8 per cent). The cyclical dynamics should be more broadly based in this and the coming year than in 2016 and, in addition to domestic demand, should also be supported by foreign trade, "Brezinschek is optimistic.
Inflation dynamics weaken
Inflation in Austria is expected to have reached its provisional high at 2.4 per cent in February. "We expect an average inflation rate of 2.0 per cent for 2017 as a whole (2018: 2.1 per cent). Although the development of oil prices has now had a much lesser (exacerbating) effect on inflation than just a few months ago, a moderate increase in the price pressure resulting from the core rate is still expected not least due to the good economic development, "says Brezinschek.
After the sharp rise in inflation rates in CE/SEE by the energy price effect at the beginning of the year, the situation has also calmed down somewhat. In some countries the peak of inflation was reached in March. In Russia, the path of declining inflation has continued. The central bank target of 4 per cent is almost reached.
Specialist shortage in the USA
In the US, annualized real GDP grew by only 1.2 per cent in the first quarter. For the second quarter, however, a markedly stronger increase in economic output is apparent on the basis of the "hard" data already available. Positive impulses are likely to come from private consumption spending, which had hardly picked up at the beginning of the year. Raiffeisen RESEARCH also expects a healthy increase in investments. "Our forecast of an increase in real gross domestic product of 2.4 per cent in the current year appears to be only slightly on the optimistic side," says Brezinschek. The dynamics in the employment structure have thus diminished noticeably since the beginning of the year. On average, 224,000 new jobs were filled in January and February, while the average between March and May was 121,000. However, there is some evidence that the slowdown in the employment structure is not due to lower demand for labor but, on the contrary, a lack of qualified applicants.
Oil price: Focus on stock reduction
At the end of May, the OPEC member states met in Vienna to decide on their further strategy regarding the reduction of output decided at the end of 2016. Ultimately, the meeting did not result in a great surprise. As announced in advance, the OPEC countries as well as eleven non-OPEC countries agreed on an extension of the reduction by nine months until the end of March 2018. The main goal during this period is to ensure a lowering of the still ample global oil reserves to the average of the past years. “We expect the Brent price to move between USD 54 and USD 62 per barrel for the second half of the year,” says Brezinschek.
Foreign exchange markets: Monetary divergence initially speaks for the US dollar
As a result of the ECB's interest rate meeting on June 8 and the Fed's on 14 June, the US dollar's short-term and medium-term prospects have brightened. ECB President Mario Draghi thereby disappointed market players who had bet on the announcement of a timeline for the withdrawal from the bond purchases or even for a first interest rate hike. On the other hand, the Fed reiterated its intention to continue raising the benchmark interest rate in the coming quarters. "An ECB that continues to buy bonds and leaves the benchmark interest rate unchanged at 0 per cent is therefore facing a Fed that keeps raising the benchmark interest rate and selling bonds. We believe this should be reflected in a spread increase the between two-year German and US government bonds. This in return should boost the US dollar in the coming months. By December, we see EUR/USD at 1.07," says Brezinschek.
Bond and stock markets
According to Raiffeisen RESEARCH, the upward trend is still intact on the American equity market in view of the solid fundamentals (economic activity, profit growth). In the summer months, however, the increased valuations and the Fed's measures should initiate a consolidation movement. In Europe, the robust cyclical dynamics and the expected earnings increases are basically the main reasons for a continuation of the uptrend for the Euro STOXX 50 and the DAX. Since the valuations have attracted considerable attention recently and the investors have already priced in a lot of positive results, a better entry point is likely to arise in the summer months.
The euro government bond market was characterized by high nervousness and markedly increased risk premiums up to the end of April in the context of the French presidential election. The victory of Emmanuel Macron turned the risk sentiment into the positive. The political risks were quickly and massively outpriced. After the "Macron rally", Raiffeisen RESEARCH sees little more potential downside for the risk premiums of most euro area countries. As of September, political risks could once again become the focus. The greatest risk continues to be from Italy. The political situation is particularly unstable here and has the potential to turn into a systemic crisis.
ATX: Austria back in focus
An increase of almost 20 per cent since the beginning of the year shows the ATX among the best developing European stock indices. It has been one of the outperformers in Europe since 2015, and the outperformance has really gained momentum since the second half of 2016. The strong development is due, among other things, to the significantly improved perception of the CEE region. Higher economic growth than in the euro area creates confidence, and this positively affects the Austrian stock market due to the high sales exposure of Austrian companies. A further point is a slightly improved environment for the financials weighted in the ATX as a result of rising expectations. In addition, it is often the case that, in the case of an advanced upswing in the leading exchanges, investors' interest in smaller markets is increasing. Currently, the ATX is valued at a P/E ratio of 13.6 for 2017 and 12.7 for 2018. A level that RCB considers appropriate and that is equivalent to a discount of more than 10 per cent compared to the broad European market. RCB's analysts forecast the ATX slightly higher at 3,250 points for the end of the year, although there is a slight setback potential over the summer months.
Financial analyst: Peter Brezinschek, RBI Vienna
Editor: Helge Rechberger, Financial Analyst, RBI Vienna
Cut-off for data (“Global Markets“): 16 June 2017, 06:00 PM CEST
Cut-off for data (“Austria & CEE“): 19 June 2017, 05:00 PM CEST
Completed: 27 June 2017, 06:00 PM CEST
First dissemination: 28 June 2017, 09:30 AM CEST
Full versions of both strategies can be ordered from aleksandra.srejic@rbinternational.com.
1Central and Eastern Europe (CEE) is composed of the regions of Central Europe (CE) with the Czech Republic, Poland, Slovakia, Slovenia and Hungary, Southeastern Europe (SEE) is composed of Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Romania and Serbia as well as the region Eastern Europe (EE) with Belarus, Russia and Ukraine.
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| Investment recommendation | Column A Basis: All recommendations for all financial instruments | Column B Basis: Recommendations for financial instruments of all issuers, for which special services were rendered in the last 12 months |
| Buy recommendations | 41.9% | 50.0% |
| Hold recommendations | 48.7% | 25.0% |
| Sell recommendations | 9.3% | 25.0% |
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Recommendations history: Local currency government bonds (I: no change)*
Government Bonds
| Outright: Recommendations concerning financial instruments or issuers (disseminated during a period of 12 month prior to this publication), which differ from recommendations made in this publication with a recommendation horizon of 1-4 months | |||||
|---|---|---|---|---|---|
| Issuer | DE | US | |||
| Maturity segment | 2Y | 5Y | 10Y | 2Y | 10Y |
| 09/06/2016 | Sell | Sell | Sell | Sell | Sell |
| 01/07/2016 | Sell | I | Sell | Sell | Sell |
| 08/07/2016 | I | Sell | I | I | I |
| 22/07/2016 | I | I | Hold | I | I |
| 28/07/2016 | I | I | Sell | I | I |
| 05/09/2016 | Sell | Sell | Sell | Sell | Sell |
| 16/09/2016 | Sell | Sell | Sell | I | I |
| 23/09/2016 | I | I | I | Sell | Sell |
| 28/10/2016 | I | Hold | Hold | I | I |
| 11/11/2016 | I | I | Buy | I | Hold |
| 18/11/2016 | I | I | I | Hold | I |
| 25/11/2016 | Sell | Sell | Sell | Hold | Hold |
| 16/12/2016 | Sell | Sell | Sell | Hold | Hold |
| 13/01/2017 | I | I | I | I | Sell |
| 03/02/2017 | I | Hold | Hold | I | I |
| 24/02/2017 | I | Sell | Sell | I | I |
| 03/03/2017 | Sell | Sell | Sell | Sell | Hold |
| 10/03/2017 | Sell | Hold | Hold | Sell | Hold |
| 07/04/2017 | I | Sell | Sell | I | Sell |
| 05/05/2017 | I | Hold | Hold | I | I |
| 26/05/2017 | Sell | Hold | Hold | Hold | Sell |
| 02/06/2017 | Sell | Sell | Sell | Sell | Sell |
I ... no change
| Spread: Recommendations concerning financial instruments or issuers (disseminated during a period of 12 month prior to this publication), which differ from recommendations made in this publication with a recommendation horizon of 1-4 months | |||||||
|---|---|---|---|---|---|---|---|
| Issuer | AT-DE | FR-DE | IT-DE | ES-DE | IE-DE | PT-DE | DE-DE |
| Maturity segment | 10Y-10Y | 10Y-10Y | 10Y-10Y | 10Y-10Y | 10Y-10Y | 10Y-10Y | 10Y-2Y |
| 06/06/2016 | Buy | Buy | Buy | Buy | Buy | Buy | Sell |
| 29/06/2016 | Hold | Hold | Hold | Hold | Hold | Hold | l |
| 01/07/2016 | l | l | l | l | l | l | Sell |
| 15/07/2016 | l | l | l | l | l | l | Hold |
| 03/08/2016 | Hold | Hold | Hold | Hold | Hold | Hold | l |
| 05/09/2016 | Hold | Hold | Hold | Hold | Hold | Hold | Hold |
| 16/09/2016 | l | l | l | l | l | l | Sell |
| 23/09/2016 | Hold | Hold | Hold | Hold | Hold | Hold | l |
| 10/10/2016 | l | l | l | l | l | l | l |
| 28/10/2016 | Hold | Hold | Hold | Hold | Hold | Hold | Hold |
| 04/11/2016 | l | l | l | l | l | l | l |
| 18/11/2016 | Buy | Buy | l | l | Buy | l | I |
| 25/11/2016 | Buy | Buy | Hold | Hold | Buy | Hold | Hold |
| 16/12/2016 | Buy | Buy | Hold | Hold | Buy | Hold | Sell |
| 25/01/2017 | Hold | l | l | l | l | l | l |
| 27/01/2017 | l | l | Buy | l | l | l | l |
| 03/02/2017 | l | l | l | l | l | l | Hold |
| 03/03/2017 | Hold | Buy | Buy | Hold | Buy | Hold | Hold |
| 17/03/2017
| Hold | Buy | Hold | Hold | Buy | Hold | l |
| 03/04/2017 | l | l | l | l | Hold | l | l |
| 07/04/2017 | I | I | I | I | I | I | Sell |
| 14/04/2017 | I | Hold | I | I | I | I | I |
| 05/05/2017 | I | Sell | Sell | Sell | Sell | Sell | I |
| 26/05/2017 | Hold | Sell | Sell | Sell | Sell | Sell | Sell |
I ... no change
CEE government bonds
| Local currency government bonds: Recommendations concerning financial instruments or issuers (disseminated during a period of 12 month prior to this publication), which differ from recommendations made in this publication* | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
| CZ | CZK | HU | HUF | PL | PLN | RO | RON | RU | RUB | TR | TRY | ||||||
| Date | 2y | 10y | 2y | 10y | 2y | 10y | 2y | 10y | 2y | 10y | 2y | 10y | ||||||
| 26/04/2016 | H | H | H | H | B | H | H | H | H | H | H | H | H | H | S | H | H | S |
| 31/05/2016 | I | I | I | I | I | I | I | I | I | I | I | I | B | B | H | B | B | H |
| 20/06/2016 | I | I | I | I | I | I | I | I | I | I | I | I | I | I | I | I | I | B |
| 21/07/2016 | I | I | I | I | I | I | I | I | I | I | I | I | I | I | I | S | S | S |
| 27/07/2016 | I | I | I | B | I | I | I | I | I | I | I | I | I | I | I | I | I | I |
| 25/08/2016 | I | I | I | I | I | I | I | I | I | I | I | I | I | I | I | I | I | I |
| 23/09/2016 | I | I | I | H | H | I | I | I | I | I | I | I | I | I | I | I | I | H |
| 21/10/2016 | I | I | I | I | I | I | I | I | I | I | I | I | I | I | S | I | I | I |
| 24/11/2016 | I | I | I | I | I | I | I | I | I | I | I | I | H | H | H | I | I | I |
| 15/12/2016 | I | I | I | I | B | I | I | B | I | I | I | I | B | I | I | I | I | I |
| 24/01/2017 | I | I | I | I | I | I | I | I | I | I | I | I | H | I | I | H | H | I |
| 24/02/2017 | I | I | I | I | I | I | I | H | I | I | I | I | S | S | S | I | I | I |
| 15/03/2017 | I | B | B | I | H | I | I | I | I | I | I | I | H | H | H | I | S | I |
| 27/04/2017 | I | I | I | I | I | I | I | I | S | I | I | I | B | B | I | I | H | S |
| 06/06/2017 | I | H | I | I | B | I | I | B | H | I | I | I | I | I | I | B | I | H |
| 20/06/2017 | I | H | H | I | H | I | I | I | B | S | S | I | I | I | I | I | I | I |
| * recommendations based on absolute expected performance in LCY; B: Buy, H: Hold, S: Sell, I: no change, - no coverage | ||||||||||||||||||
| Sovereign Eurobonds: Recommendations concerning financial instruments or issuers (disseminated during a period of 12 month prior to this publication), which differ from recommendations made in this publication* | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
| BG | HR | CZ | HU | KZ | LT | PL | RO | ||||||||
| Date | EUR | USD | EUR | USD | EUR | USD | EUR | USD | EUR | USD | EUR | USD | EUR | USD | EUR | USD |
| 26/04/2016 | H | -- | S | S | H | -- | B | B | -- | H | H | H | S | S | B | H |
| 13/05/2016 | I | -- | I | I | I | -- | I | I | -- | I | I | I | I | I | I | I |
| 20/06/2016 | B | -- | S | S | I | -- | B | B | -- | I | I | I | I | I | S | S |
| 21/07/2016 | I | -- | I | I | I | -- | I | I | -- | I | I | I | I | I | I | I |
| 27/07/2016 | H | -- | I | I | I | -- | H | H | -- | B | I | I | I | I | H | H |
| 25/08/2016 | I | -- | I | I | I | -- | I | I | -- | I | I | I | H | H | I | I |
| 26/08/2016 | I | -- | I | I | I | -- | I | I | -- | H | I | I | I | I | I | I |
| 26/09/2016 | B | -- | B | S | I | -- | I | I | -- | I | I | I | B | I | I | I |
| 21/10/2016 | I | -- | I | I | I | -- | I | I | -- | I | I | I | I | I | I | I |
| 28/11/2016 | H | -- | H | I | I | -- | I | I | -- | B | I | I | H | I | B | I |
| 15/12/2016 | I | -- | I | H | I | -- | I | I | -- | I | I | B | I | I | H | I |
| 24/01/2017 | I | -- | I | I | I | -- | I | I | -- | H | B | I | I | I | I | I |
| 24/02/2017 | I | -- | B | I | I | -- | I | I | -- | I | I | I | I | I | I | I |
| 15/03/2017 | I | -- | I | I | I | -- | I | I | -- | I | H | H | I | I | B | B |
| 27/04/2017 | I | -- | H | I | I | -- | I | B | -- | I | S | I | B | I | H | H |
| 06/06/2017 | B | -- | I | B | I | -- | I | H | -- | I | H | I | H | I | I | I |
| 20/06/2017 | I | -- | I | H | I | -- | I | I | -- | I | I | I | B | I | I | I |
| * recommendations based on absolute expected performance, i.e. expected spread change; B: Buy, H: Hold, S: Sell, I: no change, - no coverage | ||||||||||||||||
| Sovereign Eurobonds: Recommendations concerning financial instruments or issuers (disseminated during a period of 12 month prior to this publication), which differ from recommendations made in this publication* | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
| RU | RS | TR | UA | BY | MK | ||||||
| Date
| EUR | USD | EUR | USD | EUR | USD | EUR | USD | EUR | USD | EUR | USD |
| 26/04/2016 | H | H | – | B | B | B | -- | H | - | H | H | -- |
| 13/05/2016 | I | I | – | I | H | H | -- | I | - | I | I | -- |
| 20/06/2016 | I | I | – | I | B | I | -- | I | - | I | I | -- |
| 21/07/2016 | I | I | – | I | S | S | -- | I | - | I | I | -- |
| 27/07/2016 | B | B | – | I | I | I | -- | I | - | I | B | -- |
| 25/08/2016 | I | I | – | I | I | I | -- | I | - | I | I | -- |
| 26/08/2016 | H | H | – | H | I | I | -- | I | - | I | I | -- |
| 26/09/2016 | I | I | – | B | H | H | -- | I | - | I | I | -- |
| 21/10/2016 | I | I | – | I | B | B | -- | B | - | S | I | -- |
| 28/11/2016 | S | S | – | I | H | H | -- | H | - | I | I | -- |
| 15/12/2016 | H | I | – | I | I | I | -- | S | - | I | H | -- |
| 24/01/2017 | I | I | – | H | I | I | -- | I | - | H | I | -- |
| 24/02/2017 | I | I | – | I | I | I | -- | I | - | I | I | -- |
| 15/03/2017 | I | H | – | I | I | I | -- | I | - | I | B | -- |
| 27/04/2017 | I | I | – | I | I | I | -- | I | - | B | H | -- |
| 06/06/2017 | I | I | – | S | I | I | -- | H | - | H | B | -- |
| 20/06/2017 | I | I | – | S | B | B | -- | I | - | I | I | -- |
| * recommendations based on absolute expected performance, i.e. expected spread change; B: Buy, H: Hold, S: Sell, I: no change, - no coverage | ||||||||||||
Disclaimer Financial Analysis
Responsible for this publication: Raiffeisen Bank International AG („RBI“)
RBI is a credit institution according to §1 Banking Act (Bankwesengesetz) with the registered office Am Stadtpark 9, 1030 Vienna, Austria.
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This document is for information purposes and may not be reproduced or distributed to other persons without RBI’s permission. This document constitutes neither a solicitation of an offer nor a prospectus in the sense of the Austrian Capital Market Act (Kapitalmarktgesetz) or the Austrian Stock Exchange Act (Börsegesetz) or any other comparable foreign law. An investment decision in respect of a financial instrument, a financial product or an investment (all hereinafter “product”) must be made on the basis of an approved, published prospectus or the complete documentation for such a product in question, and not on the basis of this document.
This document does not constitute a personal recommendation to buy or sell financial instruments in the sense of the Austrian Securities Supervision Act (Wertpapieraufsichtsgesetz). Neither this document nor any of its components shall form the basis for any kind of contract or commitment whatsoever. This document is not a substitute for the necessary advice on the purchase or sale of a financial instrument, a financial product or advice on an investment. In respect of the sale or purchase of one of the above mentioned products, your banking advisor can provide individualised advice suitable for investments and financial products.
This analysis is fundamentally based on generally available information and not on confidential information which the party preparing the analysis has obtained exclusively on the basis of his/her client relationship to a person.
Unless otherwise expressly stated in this publication, RBI deems all of the information to be reliable, but does not make any assurances regarding its accuracy and completeness.
In emerging markets, there may be higher settlement and custody risk as compared to markets with established infrastructure. The liquidity of stocks/financial instruments may be influenced, amongst others, by the number of market makers. Both of these circumstances can result in elevated risk in relation to the safety of investments made in consideration of the information contained in this document.
The information in this publication is current as per the latter’s creation date. It may be outdated by future developments, without the publication being changed.
Unless otherwise expressly stated (www.raiffeisenresearch.com/special_compensation), the analysts employed by RBI are not compensated for specific investment banking transactions. Compensation of the author or authors of this report is based (amongst other things) on the overall profitability of RBI, which includes, inter alia, earnings from investment banking and other transactions of RBI. In general, RBI forbids its analysts and persons reporting to the analysts from acquiring securities or other financial instruments of any enterprise which is covered by the analysts, unless such acquisition is authorised in advance by RBI’s Compliance Department.
RBI has put in place the following organisational and administrative agreements, including information barriers, to impede or prevent conflicts of interest in relation to recommendations: RBI has designated fundamentally binding confidentiality zones. These are typically units within credit institutions, which are isolated from other units by organisational measures governing the exchange of information, because compliance-relevant information is continuously or temporarily handled in these zones. Compliance-relevant information may fundamentally not leave a confidentiality zone and is to be treated as strictly confidential in internal business operations, including interaction with other units. This does not apply to the transfer of information necessary for usual business operations. Such transfer of information is limited, however, to what is absolutely necessary (need-to-know principle). The exchange of compliance-relevant information between two confidentiality zones may only occur with the involvement of the Compliance Officer.
SPECIAL REGULATIONS FOR THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND (UK):
This document does not constitute either a public offer in the meaning of the Austrian Capital Market Act (Kapitalmarktgesetz; hereinafter „KMG“) nor a prospectus in the meaning of the KMG or of the Austrian Stock Exchange Act (Börsegesetz). Furthermore, this document does not intend to recommend the purchase or the sale of securities or investments in the meaning of the Austrian Supervision of Securities Act (Wertpapieraufsichtsgesetz). This document shall not replace the necessary advice concerning the purchase or the sale of securities or investments. For any advice concerning the purchase or the sale of securities of investments kindly contact your RAIFFEISENBANK. This publication has been either approved or issued by RBI in order to promote its investment business. Raiffeisen Bank International AG (“RBI”), London Branch is authorised by the Austrian Financial Market Authority and subject to limited regulation by the Financial Conduct Authority (“FCA”). Details about the extent of its regulation by the FCA are available on request. This publication is not intended for investors who are Retail Customers within the meaning of the FCA rules and shall therefore not be distributed to them. Neither the information nor the opinions expressed herein constitute or are to be construed as an offer or solicitation of an offer to buy (or sell) investments. RBI may have affected an Own Account Transaction within the meaning of FCA rules in any investment mentioned herein or related investments and/or may have a position or holding in such investments as a result. RBI may have been, or might be, acting as a manager or co-manager of a public offering of any securities mentioned in this report or in any related security.
SPECIFIC RESTRICTIONS FOR THE UNITED STATES OF AMERICA AND CANADA: This document may not be transmitted to, or distributed within, the United States of America or Canada or their respective territories or possessions, nor may it be distributed to any U.S. person or any person resident in Canada, unless it is provided directly through RB International Markets (USA) LLC (“RBIM”), a U.S. registered broker-dealer, and subject to the terms set forth below.
SPECIFIC INFORMATION FOR THE UNITED STATES OF AMERICA AND CANADA: This research document is intended only for institutional investors and is not subject to all of the independence and disclosure standards that may be applicable to research documents prepared for retail investors. This report was provided to you by RB International Markets (USA) LLC (RBIM), a U.S. registered broker-dealer, but was prepared by our non-U.S. affiliate Raiffeisen Bank International AG (RBI). Any order for the purchase or sale of securities covered by this report must be placed with RBIM. You can reach RBIM at 1133, Avenue of the Americas, 16th floor, New York, NY 10036, phone +1 212-600-2588. This document was prepared outside the United States by one or more analysts who may not have been subject to rules regarding the preparation of reports and the independence of research analysts comparable to those in effect in the United States. The analyst or analysts who prepared this research (i) are not registered or qualified as research analysts with the Financial Industry Regulatory Authority (“FINRA”) in the United States, and (ii) are not allowed to be associated persons of RBIM and are therefore not subject to FINRA regulations, including regulations related to the conduct or independence of research analysts.
The opinions, estimates and projections contained in this report are those of RBI only as of the date of this report and are subject to change without notice. The information contained in this report has been compiled from sources believed to be reliable by RBI, but no representation or warranty, express or implied, is made by RBI or its affiliated companies or any other person as to the report’s accuracy, completeness or correctness. Securities which are not registered in the United States may not be offered or sold, directly or indirectly, within the United States or to U.S. persons (within the meaning of Regulation S under the Securities Act of 1933 [“the Securities Act”]), except pursuant to an exemption under the Securities Act. This report does not constitute an offer with respect to the purchase or sale of any security within the meaning of Section 5 of the Securities Act and neither shall this report nor anything contained herein form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. This report provides general information only. In Canada it may only be distributed to persons who are resident in Canada and who, by virtue of their exemption from the prospectus requirements of the applicable provincial or territorial securities laws, are entitled to conduct trades in the securities described herein.
EU REGULATION NO 833/2014 CONCERNING RESTRICTIVE MEASURES IN VIEW OF RUSSIA’S ACTIONS DESTABILISING THE SITUATION IN UKRAINE
Please note that research is done and recommendations are given only in respect of financial instruments which are not affected by the sanctions under EU regulation no 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine, as amended from time to time, i.e. financial instruments which have been issued before 1 August 2014.
We wish to call to your attention that the acquisition of financial instruments with a term exceeding 30 days issued after 31 July 2014 is prohibited under EU regulation no 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine, as amended from time to time. No opinion is given with respect to such prohibited financial instruments.
INFORMATION REGARDING THE PRINCIPALITY OF LIECHTENSTEIN: COMMISSION DIRECTIVE 2003/125/EC of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the fair presentation of investment recommendations and the disclosure of conflicts of interest has been incorporated into national law in the Principality of Liechtenstein by the Finanzanalyse-Marktmissbrauchs-Verordnung.
If any term of this Disclaimer is found to be illegal, invalid or unenforceable under any applicable law, such term shall, insofar as it is severable from the remaining terms, be deemed omitted from this Disclaimer. It shall in no way affect the legality, validity or enforceability of the remaining terms, such term shall, insofar as it is severable from the remaining terms, be deemed omitted from this Disclaimer. It shall in no way affect the legality, validity or enforceability of the remaining terms.
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Raiffeisen Bank International AG
Registered Office: Am Stadtpark 9, 1030 Vienna
Postal address: 1010 Vienna, POB 50
Phone: +43-1-71707-0 Fax: + 43-1-71707-1848
Company Register Number: FN 122119m at the Commercial Court of Vienna
VAT Identification Number: UID ATU 57531200
Austrian Data Processing Register: Data processing register number (DVR): 4002771
S.W.I.F.T.-Code: RZBA AT WW
Supervisory Authorities: As a credit institution (acc. to § 1 Austrian Banking Act; Bankwesengesetz) Raiffeisen Bank International AG is subject to the supervision by the Austrian Financial Market Authority (FMA, Finanzmarktaufsicht) and the National Bank of Austria (OeNB, Oesterreichische Nationalbank). Additionally, RBI is subject to the supervision by the European Central Bank (ECB), which undertakes such supervision within the Single Supervisory Mechanism (SSM), which consists of the ECB and the national responsible authorities (Council Regulation (EU) No 1024/2013 - SSM Regulation). Unless set out herein explicitly otherwise, references to legal norms refer to norms enacted by the Republic of Austria..
Membership: Austrian Federal Economic Chamber, Federal Bank and Insurance Sector, Raiffeisen Association
Statement pursuant to the Austrian Media Act
Publisher and editorial office of this publication: Raiffeisen Bank International AG, Am Stadtpark 9, A-1030 Vienna
Media Owner of this publication: Raiffeisen RESEARCH – Verein zur Verbreitung von volkswirtschaftlichen Analysen und Finanzmarktanalysen, Am Stadtpark 9, A-1030 Vienna
Executive Committee of Raiffeisen RESEARCH – Verein zur Verbreitung von volkswirtschaftlichen Analysen und Finanzmarktanalysen:
Mag. Peter Brezinschek (Chairman), Mag. Helge Rechberger (Vice-Chairman)
Raiffeisen RESEARCH – Verein zur Verbreitung von volkswirtschaftlichen Analysen und Finanzmarktanalysen is constituted as state-registered society. Purpose and activity are (inter alia), the distribution of analysis, data, forecasts and reports and similar publications related to the Austrian and international economy as well as financial markets.
Basic tendency of the content of this publication
Presentation of activities of Raiffeisen Bank International AG and its subsidiaries in the area of conducting analysis related to the
Austrian and international economy as well as the financial markets.
Publishing of analysis according to various methods of analyses covering economics, interest rates and currencies, government
and corporate bonds, equities as well as commodities with a regional focus on the euro area
Producer of this publication: Holzer Druck, 1100 Vienna, Buchengasse 79