Building ASEAN EQUITIES REAL ESTATE. ASEAN real estate fortnightly

FLASHNOTE Building ASEAN EQUITIES REAL ESTATE ASEAN real estate fortnightly ASEAN Singapore office: Does the Grade-A office rent index tell us the whole story? CBRE Grade-A office rent index down c9% at end-2015 from peak in 1Q15 The CBRE Grade-A office rent index is generally regarded as one of the barometers for the state of the core-cbd office market in Singapore (in terms of rents). The index has registered a decline of c9% as at end-2015 (to SGD10.40 psf per month) from its most recent peak of SGD11.40 psf per month (in 1Q15), and further declines are expected over the next 12 months given large oncoming supply (mostly from three buildings Marina One, Guoco Tower and DUO) amidst weak demand. Pratik Burman Ray*, CFA Analyst The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch pratikray@hsbc.com.sg +65 6658 0611 Utkarsh Rastogi* Associate Bangalore *Employed by a non-us affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Landlords are on the defensive, but not defenceless Our recent investor meetings with top management from some of Singapore s office landlords suggest that while landlords are on the defensive, they are not defenceless. First, there are pockets of demand in the market from insurance companies, companies offering serviced offices and co-working space, as well as traditional businesses. More interesting to note is that, in recent years, tenants (especially those in financial sectors) have spent more on fit-outs (takes a longer time to amortize this), thus raising the associated costs with moving out due to considerations such as make good costs and new fit-outs. Lease tenures have also become progressively longer (the amortize costs), with landlords tightening lease terms such as surrender clauses and sub-lease clauses in their favour to protect themselves. Does the Grade-A office rent index tell us the whole story? While the index retains its relevance as a key indicator for the office rental market in Singapore s CBD, we question if this tells us the entire story given the subtlety of changes in the structure of underlying leases. In our view, this calls for a more bottom approach as opposed to simplistically using broad index as the definitive guide. Singapore: Grade-A office market rent (SGD) 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 1Q 2007 2Q 2008 3Q 2009 4Q 2010 1Q 2012 2Q 2013 3Q 2014 4Q 2015 Source: CBRE Pte Ltd (figures as at the end of each quarter), CCT Presentations Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. MICA (P) 073/06/2015 and MICA (P) 021/01/2016 Issuer of report: The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch View HSBC Global Research at: https://www.research.hsbc.com

Summary of key real estate news across ASEAN Singapore: 1Q16 private home prices declined 0.7%, HDB resale prices declined 0.1% URA, HDB, Channel News Asia: According to flash estimates released by the Urban Redevelopment Authority (URA), private residential prices in Singapore declined 0.7% in 1Q16 to 140.6 points, compared with the 0.5% decline in 4Q2015. At the same time, the HDB resale index declined 0.1% in 1Q16 after a 0.1% increase in 4Q15. HSBC comment: The renewed decline in the HDB resale index and the pickup in the pace of decline in the URA private residential index confirm our view that it would be premature to make conclusions on the state of the housing market based on the 4Q15 readings. Prices in Core Central Region rose 0.4% (vs. the 0.3% decline in 4Q15), while prices in Rest of Central Region declined 0.4% (at the same pace as 4Q15) and prices in Outside Central Region declined 0.9% (after registering no change in the previous quarter). We continue to hold our view that prices will trend lower for the rest of the year in an orderly fashion (at a similar run rate per quarter) barring any reversal or rationalisation of in-place policy measures. Singapore: Alpha Investment Partners buys rest of 78 Shenton Way Business Times: Alpha Investment Partners has taken full ownership of 78 Shenton Way after buying out Commerz Real s 50% stake. According to The Business Times, the deal prices the 362,199sf asset at SGD1,665psf for a total valuation of SGD603m (50% stake: SGD301.5m). HSBC comment: The property comprises of two towers (Tower 1: 284,622sf and Tower 2: 77,577sf) and has a remaining land lease tenure of 66 years. Rents are estimated to be around SGD7.30psf per month, which implies a net property yield of c4% for the asset. Recent transactions include that of the CPF Building (NLA: c324,000sf) in Tanjong Pagar transacted at SGD550m, which implies a pricing of csgd1,700psf for the property with a remaining land lease tenure of 51 years this property can be redeveloped into a mixed use development comprising office, retail and serviced apartments or a hotel, subject to approval from authorities. Singapore: GuocoLand announces more tenants at Guoco Tower Business Times: GuocoLand has announced new additional tenants for its 890,000sf development Guoco Tower in Tanjong Pagar. These include AccorHotels (relocating HQ from Raffles City Tower), K Line, Bunge and ManpowerGroup. HSBC comment: The new tenants announced are in addition to the ones announced earlier by GuocoLand back in Jan 2016 which included DNB Asia, Hong Leong Bank, Open Link, and Regus. GuocoLand Group also intends to centralise its Singapore operations at Guoco Tower. In our view, while aggregate demand is weak, there are pockets of demand in the market. Philippines: Ayala Land (ALI PM) issues PHP8bn 10-year fixed rate bonds at 4.85% Manila Bulletin: Ayala Land issued PHP8bn 10-year fixed rate bonds at 4.85%. The bonds, due in 2026, represent the first tranche and series of ALI s PHP50bn debt securities programme to be issued over the next three years. HSBC comment: The PHP8bn offer was 3.7x oversubscribed highlighting the continued strong demand for bonds issued by corporates like ALI, enabling them to keep their funding costs low. Recently published research Click on title to open reports 1 Apr 2016 Megaworld Corp Buy: Better disclosure could unlock value Pratik Burman Ray*, CFA 1 Apr 2016 Land and Houses Buy: Modest growth outlook is in the price Pratik Burman Ray*, CFA 1 Apr 2016 Pruksa Real Estate Buy: Limited impact from restructuring plans Pratik Burman Ray*, CFA 29 Mar 2016 Keppel REIT Buy: Feedback from investor meetings Pratik Burman Ray*, CFA 14 Mar 2016 Tesco Lotus Property Fund Downgrade to Hold: Take a pause Pratik Burman Ray*, CFA 2

Singapore property stocks and REITs under HSBC coverage Developers Ticker Price* (SGD) Market cap (SGDm) RNAV (SGD) Premium/(discount) to RNAV Target premium/ (discount) # CapitaLand CAPL SP Equity 3.02 12,853 4.85-37.8% -20% City Developments CIT SP Equity 8.43 7,665 12.96-34.9% -10% Frasers Centrepoint Limited FCL SP Equity 1.68 4,872 2.73-38.4% -15% Developers total or weighted average 25,390-37.0% Developers total or simple average 25,390-37.0% REITs / Business Trusts Ticker Price* (SGD) Market cap (SGDm) RNAV (SGD) Premium/ (discount) to RNAV DDM valuation (SGD) Target premium/ (discount) # CapitaLand Mall Trust CT SP Equity 2.11 7,473 2.07 1.9% 2.45 0% Ascendas REIT AREIT SP Equity 2.37 6,094 2.42-2.0% 2.63 0% CapitaLand Commercial Trust CCT SP Equity 1.45 4,285 1.89-23.1% 1.62-5% Suntec REIT SUN SP Equity 1.66 4,182 2.05-19.1% 2.04-10% Keppel REIT KREIT SP Equity 1.00 3,240 1.47-32.0% 1.42-5% Frasers Centrepoint Trust FCT SP Equity 2.00 1,831 1.95 2.5% 2.80-5% CDL Hospitality Trusts CDREIT SP Equity 1.31 1,296 1.69-22.6% 2.33-10% Far East Hospitality Trust FEHT SP Equity 0.64 1,139 0.82-22.6% 0.94-10% REITs / Business Trusts total or weighted average 29,540-11.2% REITs / Business Trusts total or simple average 29,540-14.6% *Priced at close of 6 April 2016 #Our target prices for developers and REITs are based on the target premium/ (discount). For developers, the target premium/ (discount) is applied to our RNAV estimate; while for REITs, it is applied to a 50:50 weighting of our RNAV and DDM valuation estimates ASEAN (ex-singapore) property stocks and REITs under HSBC coverage Developers Ticker Currency Price* Market cap (USDm) RNAV Premium/(discount) to RNAV Target premium/ discount) # Ayala Land ALI PM Equity PHP 35.00 11,145 43.33-19.2% 0.0% SM Prime SMPH PM Equity PHP 21.65 13,548 20.98 3.2% 0.0% Megaworld MEG PM Equity PHP 3.99 2,787 5.94-32.8% 0.0% Robinsons Land RLC PM Equity PHP 27.75 2,462 36.63-24.2% -10.0% Lippo Karawaci LPKR IJ Equity IDR 1030 1,801 1350-23.7% -10.0% Central Pattana CPN TB Equity THB 52.25 6,655 54.28-3.7% 0.0% Land and Houses LH TB Equity THB 9.00 3,001 10.92-17.6% 0.0% Pruksa PS TB Equity THB 26.25 1,663 36.88-28.8% 0.0% Developers total or weighted average 43,063-11.4% Developers total or simple average 43,063-18.4% REIT / Property Fund Ticker Currency Price* Market cap (USDm) Tesco Lotus Retail Growth Freehold & Leasehold Property Fund RNAV Premium/ (discount) to RNAV DDM valuation Target premium/ (discount) # TLGF TB Equity THB 15.70 1,041 13.38 17.4% 16.73 0.0% *Priced at close of 6 April 2016 #Our target prices for developers and REITs are based on the target premium/ (discount). For developers, the target premium/ (discount) is applied to our RNAV estimate; while for REITs, it is applied to a 50:50 weighting of our RNAV and DDM valuation. estimates 3

Share price performance ASEAN property Share price performance for HSBC coverage Company Pricing 52-week Absolute performance Relative performance Current price Market cap # High Low 1w 1m 3m 6m 12m YTD 1w 1m 3m 6m 12m YTD Singapore Developers CapitaLand 3.02 9.5 3.79 2.67 (3) (5) (7) 2 (16) (10) (1) (4) (8) 5 3 (7) City Developments 8.43 5.7 10.86 6.61 3 11 12 5 (18) 10 5 12 12 8 1 13 Frasers Centrepoint Limited 1.68 3.5 1.92 1.45 4 6 1 11 (5) 0 6 7 1 14 13 2 Singapore REITs / Business Trusts CapitaLand Mall Trust 2.11 5.5 2.28 1.85 (0) (3) 10 8 (5) 9 2 (2) 9 11 13 12 Ascendas REIT 2.37 4.5 2.71 2.09 (2) (3) 4 (1) (7) 4 0 (2) 4 2 11 6 CapitaLand Commercial Trust 1.45 3.1 1.79 1.23 (3) (2) 6 5 (18) 7 (1) (1) 6 8 1 10 Suntec REIT 1.655 3.1 1.90 1.43 (3) (3) 5 5 (11) 7 (1) (2) 5 8 8 9 Keppel REIT 1.00 2.4 1.24 0.86 1 3 8 3 (18) 8 3 3 7 6 1 10 Frasers Centrepoint Trust 1.995 1.4 2.15 1.80 (0) 2 8 2 (1) 8 2 3 8 5 17 11 CDL Hospitality Trusts 1.31 1.0 1.78 1.22 (1) 0 (2) (3) (26) (1) 1 1 (2) 0 (7) 1 Far East Hospitality Trust 0.635 0.8 0.84 0.56 1 (2) (2) (4) (22) (5) 3 (1) (3) (1) (3) (2) ASEAN (ex-singapore) Developers Ayala Land 35.00 11.3 41.40 27.20 (1) 3 6 0 (12) 2 1 (1) 0 (2) (1) (2) SM Prime 21.65 13.6 23.20 18.10 (1) 4 2 3 6 (0) 0 (0) (3) 1 17 (4) Megaworld 3.99 2.8 5.87 3.00 (3) 4 (4) (13) (29) (6) (2) 0 (10) (14) (18) (9) Robinsons Land 27.75 2.5 33.25 22.80 (8) 1 3 (5) (8) 1 (6) (3) (3) (7) 3 (2) Lippo Karawaci 1,030 1.9 1,460 910 (2) (4) 1 (10) (23) (0) (3) (4) (5) (20) (12) (6) Central Pattana 3.18 2.1 3.57 2.80 2 3 1 (1) (8) (1) 2 1 (2) (5) (1) (2) Land and Houses 52.25 6.6 53.50 39.75 1 7 12 15 18 11 4 8 3 15 29 5 Pruksa 9.00 3.0 10.30 7.45 1 4 0 12 (9) (5) 3 4 (9) 12 2 (11) ASEAN (ex-singapore) REITs/ Property funds Tesco Lotus Retail Growth Freehold & Leasehold Property Fund 15.70 1.0 15.90 12.79 2 3 16 22 17 17 5 3 7 21 28 11 *Priced at close of 6 April 2016, # in USDbn 4

Singapore REITs / Business Trusts comparison table S.No. Name Segment Description Price 52w Low 52w High (SGD) (SGD) (SGD) Mkt cap Fwd (SGD) dividend yield (%) 1 CapitaCommercial Trust* Office Best proxy to Singapore CBD office among REITs 1.45 1.23 1.79 4,285 5.9 0.87 2 Keppel REIT* Office Alternative proxy to Singapore CBD office among 1.00 0.86 1.24 3,240 7.0 0.72 REITs. Part owner of ORQ and MBFC 3 Ascendas India Trust Office Owner of business parks in India 0.89 0.70 0.94 819 6.2 1.44 4 Frasers Commercial Trust Office Owns assets of previously listed Allco REIT 1.30 1.15 1.58 1,023 7.6 0.83 5 OUE Commercial Trust Office Owns one office building each in Singapore & China 0.65 0.56 0.75 838 7.7 0.62 6 Indiabulls Properties Investment Trust Office Owner of office in Parel (Mumbai, India) 0.19 0.15 0.48 141 NA NA Average (Office) 6.5 0.83 7 CapitaMall Trust* Retail Largest Singapore listed REIT and proxy to 2.11 1.85 2.28 7,473 5.2 1.21 Singapore retail 9 Frasers Centrepoint Trust* Retail Proxy to Singapore suburban retail 2.00 1.80 2.15 1,831 5.8 1.13 10 CapitaRetail China Trust Retail Owner of retail malls in China 1.44 1.30 1.78 1,232 7.8 1.29 11 Lippo-Malls Indonesia Retail Trust Retail Owner of retail malls in Indonesia 0.33 0.29 0.38 925 9.4 0.87 12 SPH REIT Retail Owns two retail assets in Singapore 0.97 0.90 1.09 2,449 5.8 1.07 13 Croesus Retail Trust Retail Portfolio of retail assets in Japan 0.81 0.75 0.91 579 7.7 0.90 Average (Retail) 6.0 1.15 14 Suntec REIT* Retail/Office Owns Suntec City and part owner of ORQ & MBFC 1.66 1.43 1.90 4,182 6.0 0.79 15 Starhill Global REIT Retail/Office Previously MMP REIT and owns Starhill REITs 0.79 0.70 0.89 1,712 6.6 0.84 assets in Malaysia as well as assets in Japan, China & Australia 16 Mapletree Commercial Trust Retail/Office Portfolio includes a shopping mall & office buildings 1.40 1.23 1.66 2,982 5.8 1.31 located in Singapore 17 Mapletree Greater China Commercial Retail/Office Owner of Festival Walk in Hong Kong and Gateway 0.96 0.81 1.10 2,633 7.4 1.01 Trust Plaza in Beijing Average (Mixed) 6.4 0.98 18 Ascendas REIT* Industrial Best proxy to Singapore industrial 2.37 2.09 2.71 6,094 6.4 1.20 19 Mapletree Logistics Trust Industrial Owns logistics assets across Singapore, Japan, 1.01 0.91 1.26 2,515 7.4 1.09 Malaysia, Hong Kong, China, South Korea and Vietnam 20 Cache Logistics Trust Industrial Sponsored by CWT, that previously sold assets to 0.86 0.81 1.20 768 9.8 0.88 Cambridge REIT 21 Cambridge Industrial Trust Industrial Managed by Oxley Capital, NAB and Mitsui & Co. 0.55 0.49 0.73 717 8.2 0.79 Owns a diversified portfolio of industrial assets in Singapore. 22 AIMS AMP Capital Industrial REIT Industrial Previously MI REIT. Owns a portfolio of industrial 1.35 1.27 1.53 855 8.6 0.88 assets in Singapore, largely in the logistics segment. 23 Mapletree Industrial Trust Industrial Predominately owns industrial assets sold by JTC 1.58 1.35 1.64 2,845 6.9 1.42 24 Sabana Shari ah Compliant Industrial Industrial First Shari ah compliant REIT in Singapore. Started 0.64 0.62 0.91 470 11.1 0.59 REIT by ex-cambridge REIT investment & asset management professionals 25 Soilbuild Business Space REIT Industrial Owns portfolio of industrial properties (including 0.74 0.70 0.88 694 8.5 0.93 business parks) and sponsored by Soilbuild Group 26 Viva Industrial Trust Industrial Owns industrial assets in Singapore largely 0.71 0.67 0.85 613 NA 0.96 comprising business parks Average (Industrial) 7.0 1.13 27 CDL Hospitality Trusts* Hospitality Hotels in Singapore, Australia, NZ and the Maldives 1.31 1.22 1.78 1,296 7.9 0.80 28 Far East Hospitality Trust* Hospitality Hotels and serviced residences in Singapore 0.64 0.56 0.84 1,139 7.4 0.67 29 Ascott REIT Hospitality Hospitality assets across Asia and Europe 1.10 1.05 1.32 1,804 7.6 0.80 30 Ascendas Hospitality Trust Hospitality Hotels in Australia, Japan, China and Singapore 0.69 0.57 0.81 767 8.2 0.89 31 OUE Hospitality Trust Hospitality Owns one hotel and one retail mall in Singapore 0.68 0.63 0.92 1,202 9.0 0.74 Average (Hospitality) 8.0 0.78 32 Parkway Life REIT Healthcare Largest listed healthcare REIT in Asia with assets in 2.41 2.08 2.46 1,458 5.0 1.48 Singapore and Japan. 33 First REIT Healthcare Owns hospitals in Indonesia 1.24 1.14 1.47 946 7.0 1.28 Average (Healthcare) 5.8 1.40 34 Saizen REIT Residential Owns residential properties in Japan 0.09 0.04 0.10 26 NA NA Overall average 6.6 1.02 Note: Price as at close of 6 April 2016 *HSBC estimates Source: Bloomberg consensus for stocks not covered by HSBC, HSBC estimates for covered stocks. Price/ NTA 5

Singapore real estate industry statistics Total new supply of private residential Definitive new supply of private residential No. of units 25,000 20,000 15,000 10,000 Av g take up (2004-1H15): 12,151 units Av g Supply: 14,706 units No. of units 24,000 18,000 12,000 Av g take up (2004-1H15): 12,151 units Av g Supply: 13,404 units 5,000 6,000 0 2H2015 2016 2017 2018 2019 >2019 Under Construction Planned 0 2H2015 2016 2017 2018 2019 >2019 Under Construction Planned Source: URA REALIS, HSBC estimates Source: URA REALIS, HSBC estimates New supply of office space in the pipeline New supply of retail space in the pipeline 6,000 3,000 (In '000 sf) 5,000 4,000 3,000 2,000 Av g take up (2004-1H15): 1.3msf Av g Supply: 2.4msf (In '000 sf) 2,500 2,000 1,500 1,000 Av g Take-up (2011-1H 15): 0.9msf Av g Supply : 1.7msf 1,000 500 0 2H2015 2016 2017 2018 2019 >2019 Under Construction Planned 0 2H2015 2016 2017 2018 2019 >2019 Under Construction Planned Source: URA REALIS, HSBC estimates Source: URA REALIS, HSBC estimates New supply of warehouse space in the pipeline New supply of hotel rooms in the pipeline (In '000 sf) 12,000 10,000 8,000 6,000 4,000 2,000 Av g take up (2004-1H15): 2.8msf Av g Supply: 3.5msf 75,000 70,000 65,000 60,000 55,000 50,000 45,000 2015-18 CAGR: 3.8% 2,727 652 3,930 61,287 68,596 0 2H2015 2016 2017 2018 2019 >2019 Under Construction Planned 40,000 35,000 2015 2016 2017 2018 Total 2018 Source: URA REALIS, HSBC estimates Source: CDL, URA REALIS, HSBC estimates 6

ASEAN real estate at a glance Singapore developers: PBV chart Singapore REITs: PBV chart 3.2 2.0 2.4 1.6 +1 SD: 1.67 Av g: 1.19 1.6 1.2 Av g: 1.09 +1 sd: 1.33 0.8-1 SD: 0.71 0.8-1 sd: 0.85 0.0 Jan-03 Aug-05 Apr-08 Nov-10 Jul-13 Mar-16 Singapore Developers PBV +1 std dev -1 std dev 0.4 Jul-06 Dec-08 May-11 Oct-13 Mar-16 S-REITs PBV +1 std dev -1 std dev Indonesia developers: PBV chart 4.0 3.5 3.0 +1SD: 2.81 Av g: 2.43 2.5 2.0-1SD: 2.05 1.5 Mar-06 Sep-08 Mar-11 Sep-13 Mar-16 Indonesia developers PBV +1 std dev -1 std dev Malaysia developers: PBV chart 3.2 2.7 2.2 +1 SD: 1.92 1.7 Av g: 1.51 1.2-1SD: 1.10 0.7 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Malaysia developers PBV +1 s td dev -1 std dev Philippines developers: PBV chart 5.0 Thailand developers: PBV chart 6.5 4.0 +1SD: 3.44 5.5 4.5 +1 SD:4.09 3.0 Av g:2.84 3.5 Av g: 3.19 2.0-1SD: 2.24 2.5 1.5-1 SD: 2.29 1.0 Jan-05 Mar-07 Jun-09 Sep-11 Dec-13 Mar-16 Philippine developers PBV +1 s td dev -1 std dev 0.5 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Thailand developers PBV +1 std dev -1 std dev 7

Disclosure appendix Analyst Certification The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Pratik Ray Important disclosures Equities: Stock ratings and basis for financial analysis HSBC believes an investor s decision to buy or sell a stock should depend on individual circumstances such as the investor s existing holdings, risk tolerance and other considerations and that investors utilise various disciplines and investment horizons when making investment decisions. Ratings should not be used or relied on in isolation as investment advice. Different securities firms use a variety of ratings terms as well as different rating systems to describe their recommendations and therefore investors should carefully read the definitions of the ratings used in each research report. Further, investors should carefully read the entire research report and not infer its contents from the rating because research reports contain more complete information concerning the analysts views and the basis for the rating. From 23rd March 2015 HSBC has assigned ratings on the following basis: The target price is based on the analyst s assessment of the stock s actual current value, although we expect it to take six to 12 months for the market price to reflect this. When the target price is more than 20% above the current share price, the stock will be classified as a Buy; when it is between 5% and 20% above the current share price, the stock may be classified as a Buy or a Hold; when it is between 5% below and 5% above the current share price, the stock will be classified as a Hold; when it is between 5% and 20% below the current share price, the stock may be classified as a Hold or a Reduce; and when it is more than 20% below the current share price, the stock will be classified as a Reduce. Our ratings are re-calibrated against these bands at the time of any material change (initiation or resumption of coverage, change in target price or estimates). Upside/Downside is the percentage difference between the target price and the share price. Prior to this date, HSBC s rating structure was applied on the following basis: For each stock we set a required rate of return calculated from the cost of equity for that stock s domestic or, as appropriate, regional market established by our strategy team. The target price for a stock represented the value the analyst expected the stock to reach over our performance horizon. The performance horizon was 12 months. For a stock to be classified as Overweight, the potential return, which equals the percentage difference between the current share price and the target price, including the forecast dividend yield when indicated, had to exceed the required return by at least 5 percentage points over the succeeding 12 months (or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock was expected to underperform its required return by at least 5 percentage points over the succeeding 12 months (or 10 percentage points for a stock classified as Volatile*). Stocks between these bands were classified as Neutral. *A stock was classified as volatile if its historical volatility had exceeded 40%, if the stock had been listed for less than 12 months (unless it was in an industry or sector where volatility is low) or if the analyst expected significant volatility. However, stocks which we did not consider volatile may in fact also have behaved in such a way. Historical volatility was defined as the past month s average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating, however, volatility had to move 2.5 percentage points past the 40% benchmark in either direction for a stock s status to change. 8

Rating distribution for long-term investment opportunities As of 7 April 2016, the distribution of all ratings published is as follows: Buy 46% (26% of these provided with Investment Banking Services) Hold 40% (27% of these provided with Investment Banking Services) Sell 14% (20% of these provided with Investment Banking Services) For the purposes of the distribution above the following mapping structure is used during the transition from the previous to current rating models: under our previous model, Overweight = Buy, Neutral = Hold and Underweight = Sell; under our current model Buy = Buy, Hold = Hold and Reduce = Sell. For rating definitions under both models, please see Stock ratings and basis for financial analysis above. HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt (including derivatives) of companies covered in HSBC Research on a principal or agency basis. Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking, sales & trading, and principal trading revenue. Whether, or in what time frame, an update of this analysis will be published is not determined in advance. Economic sanctions imposed by the EU and OFAC prohibit transacting or dealing in new debt or equity of Russian SSI entities. This report does not constitute advice in relation to any securities issued by Russian SSI entities on or after July 16 2014 and as such, this report should not be construed as an inducement to transact in any sanctioned securities. For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research. Additional disclosures 1 This report is dated as at 8 April 2016. 2 All market data included in this report are dated as at close 6 April 2016, unless otherwise indicated in the report. 3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC s analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC s Investment Banking business. Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner. 9

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No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of The Hongkong and Shanghai Banking Corporation Limited Singapore Branch. MICA (P) 073/06/2015 and MICA (P) 021/01/2016 [506275] 10