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Ucap Hong Kong Asset Management Limited
20th September 2016
Equity Market Review
Equity Strategy Highlights
� Global Markets Highlights
� Global stocks and bonds dropped in September on concerns central banks may put an end to easy-
money policies.
� Investors now await tomorrow’s BOJ and FOMC meetings for more insight.
� Important Events This Week
� Tuesday : US Housing starts
� Wednesday: BOJ Meeting, FOMC meeting
� Thursday: US Jobless Claims, US Existing Home Sales
� Monday: US New Home Sales
20 September, 2016
Equity Strategy Highlights
� Global Leaders – 2016
� The European portfolio is now in positive territory for the year and remains very strong compared to
indices.
� The US portfolio is still lagging despite a positive performance (and after a strong outperformance in
2015)
� The weakness of the Pharmaceuticals sector is weighting on both portfolios.
• Europe: -0.9% YTD vs Euro Stoxx at -7% YTD (6.1% alpha).
• US: +2.3% YTD vs S&P at +6.3% YTD (-4% alpha).
� Stock-Picking List – 2016
� The average performance of our Stock-Picking YTD is +0.47%. The average alpha is +238 bps.
� We have closed positions for the time being.
20 September, 2016
Global Leaders Update
Astrazeneca
Medtronic & CVS
20 September, 2016
Global Leaders
� The global Health Care sector has become the worst sector performer in 2016 due to fears
surrounding pricing pressures in the US.
� The US remains the most profitable market for Global Pharmaceuticals companies as prices are
typically much higher than in other developed countries. This has led healthcare to become a major
issue in the US presidential election with both Clinton and Trump coming up with their own
proposals.
� The worst outcome for the sector would probably be that Hillary gets elected. But even in that case,
the process of regulating prices should take some time, be done through a direct negotiation with
pharmaceuticals companies and could lead to higher Medicare volumes in exchange for lower prices
and to more funds allocated to R&D.
� The issue is well know by both Pharmaceutical companies and investors and is already priced
in. And there remains a number of positive factors for the sector:
� Low relative valuation,
� High growth prospects with new therapies in developed countries and new markets in emergings,
� High cash piles and an appetite for M&A.
� For these reasons, we want to hold to our pharmaceutical stocks and we add Astrazeneca
and Medtronics (see our August 30 report) to our Global Leaders Portfolios to diversify away
specific risks.
� We also reduce by half the exposure to CVS as the company is exposed to political pressure through
is Pharmacy Benefit Management (PBM) business (CVS Caremark).
20 September, 2016
Astrazeneca
� Astrazeneca is a UK based global pharmaceutical company created in 1999 through the
merger of a Swedish and a UK groups.
� Sales have declined since 2011 after the low of a number of patents but thanks to
acquisitions, cost cutting and investment in R&D, the company is entering a new growth
cycle.
� Astrazeneca is the strong challenger in the race for the Immuno-Oncology market, just
behind Merck and Bristol Myers. The British Pharmaceutical company is also well positioned
in Diabetes and Cardio-Vascular diseases.
� Many key data trial are expected in 2017 that could lead to a further rerating of the stock.
� Despite the recent rebound, the stocks still has an attractive 4% dividend yield.
20 September, 2016
Astrazeneca
20 September, 2016
Astrazeneca
20 September, 2016
The stock rose strongly after the Brexit as most of Astrazeneca revenues are generated outside the UK. It rose gain last week after
one its diabetes drug combination showed good results in a Phase 3trial.
Investment Ideas
Global Leaders
Stock Picking List
Latest Equity Research
20 September, 2016
Global Leaders
20 September, 2016
Benchmark: S&P 500Benchmark: Euro Stoxx 50
� European Portfolio � US Portfolio
The Global Leaders are quality companies that we believe are fit for a long-term investment.
We launched this strategy in August 2011. Please read our special report for a full explanation of this strategy.
Portfolio Benchmark Delta Annualized Portfolio Benchmark Delta Annualized
Performance 93% 57% 36.5% 14% Performance 113% 96% 17.4% 16%
Performance YTD -0.9% -7.0% 6.2% Performance YTD 2.3% 6.3% -4.0%
Volatility 15.9% 22.0% -6.1% Volatility 13.6% 14.4% -0.8%
Max DrawDown -18.7% -27.8% 9.1% Max DrawDown -13.1% -13.0% -0.2%
-15
5
25
45
65
85
105
125Index Benchmark
-10
10
30
50
70
90
110
130
Index Benchmark
*Since August 2011
Global Leaders – Current List
20 September, 2016
� European Portfolio � US Portfolio
Name Mkt Cap ($bn) Sector
Nestlé 245 Consumer Staples
Roche 214 Health Care
Novartis 210 Health Care
ABInbev 202 Consumer Staples
Unilever 139 Consumer Staples
Novo Nordisk 118 Health Care
BATS 116 Consumer Staples
Inditex 112 Consumer Discretionary
L'Oréal 104 Consumer Staples
Sanofi 100 Health Care
LVMH 85 Consumer Discretionary
Astrazeneca 84 Health Care
Daimler 73 Consumer Discretionary
Allianz 67 Financials
Reckitt Benckiser 66 Consumer Staples
BMW 54 Consumer Discretionary
AXA 51 Financials
Heineken 50 Consumer Staples
Vinci 45 Industrials
Fresenius 42 Health Care
Essilor 28 Health Care
Philips 27 Industrials
Dassault Systemes 22 Information Technology
Name Mkt Cap ($bn) Sector
Apple 624 Information Technology
Alphabet 541 Information Technology
Microsoft 449 Information Technology
Facebook 373 Information Technology
Amazon 368 Consumer Discretionary
Exxon 349 Energy
Johnson & Johnson 324 Health Care
AT&T 247 Telecommunication Services
JP Morgan 240 Financials
Wells Fargo 231 Financials
Verizon 210 Telecommunication Services
Visa 195 Information Technology
Merck & Co 172 Health Care
Philip Morris 154 Consumer Staples
Pepsico 152 Consumer Staples
Walt Disney 149 Consumer Discretionary
Altria 123 Consumer Staples
Medtronic 119 Health Care
Mastercard 110 Information Technology
CVS 96 Consumer Staples
Nike 93 Consumer Discretionary
Bristol Myers 92 Health Care
Walgreen 88 Consumer Staples
Honeywell 88 Industrials
Starbucks 79 Consumer Discretionary
Accenture 72 Information Technology
Goldman Sachs 71 Financials
Reynolds 68 Consumer Staples
Costco 67 Consumer Staples
Time Warner 58 Consumer Discretionary
Adobe 50 Information Technology
Stock-Picking List – Performance
� Hit Ratio 35%
� Hit Ratio Alpha 58%
� Average Perf. 0.47%
� Average Alpha 2.38%
� Nb. of Trades 31
� Open Trades 0
20 September, 2016
Average alpha of each stock strategy when
compared to its index (S&P or Euro Stoxx) over
the same holding period.
Average performance of each stock
strategy.
Please ask for more details.
Latest Equity Research
20 September, 2016
Date Document Strategy Stocks Covered
September 19, 2016 Key Highlight Global Leaders Astrazeneca
September 6, 2016 Weekly Report Company Primer Airbus
August 30, 2016 Weekly Report Company Primer Medtronic
August 23, 2016 Weekly Report Thematic View Costco, Kroger
August 12, 2016 Key Highlight Tech Leaders Alibaba
August 8, 2016 Key Highlight Global Leaders Bristol-Myers
August 4, 2016 Key Highlight Global Leaders Time Warner
July 29, 2016 Key Highlight Global Leaders Alphabet
July 29, 2016 Company Primer Global Leaders Apple, Microsoft, CVS, Walgreens, Disney, Time Warner
July 28, 2016 Key Highlight Global Leaders Facebook
July 27, 2016 Key Highlight Global Leaders Apple
July 22, 2016 Key Highlight Global Leaders Starbucks
July 20, 2016 Key Highlight Global Leaders Johnson & Johnson
July 19, 2016 Key Highlight Thematic View IBM
July 15, 2016 Key Highlight Global Leaders JPMorgan
July 12, 2016 Key Highlight Global Leaders Amazon
July 8, 2016 Key Highlight Global Leaders PepsiCo
July 7, 2016 Key Highlight Global Leaders Walgreens
July 4, 2016 Company Primer Thematic View Nike, Under Armour
June 30, 2016 Key Highlight Thematic View US Banks
June 29, 2016 Key Highlight Global Leaders Nike
June 28, 2016 Weekly Report Global Leaders Reckitt Benckiser, Unilever
June 20, 2016 Company Primer Global Leaders Heineken
June 16, 2016 Key Highlight Global Leaders Inditex
June 14, 2016 Company Primer Global Leaders Accenture
June 14, 2016 Key Highlight Global Leaders Apple
June 14, 2016 Weekly Report Tech Leaders Accenture
June 9, 2016 Company Primer Global Leaders Starbucks
June 9, 2016 Company Primer Global Leaders Facebook
June 9, 2016 Company Primer Global Leaders Amazon
June 9, 2016 Company Primer Global Leaders Alphabet
June 7, 2016 Company Primer Tech Leaders PayPal
June 7, 2016 Company Primer Tech Leaders Broadcom
June 7, 2016 Company Primer Tech Leaders Adobe Systems
June 7, 2016 Key Highlight Thematic View Bristol-Myers
June 7, 2016 Weekly Report Tech Leaders Adobe, Broadcom, PayPal
June 3, 2016 Key Highlight Global Leaders Johnson & Johnson
Date Document Strategy Stocks Covered
May 31, 2016 Weekly Report Global Leaders Alphabet, Amazon, Facebook
May 27, 2016 Key Highlight Global Leaders Costco
May 24, 2016 Weekly Report Thematic View Swisscom, Deutsche Tel., Vodafone, BT Group
May 17, 2016 Weekly Report Global Leaders Heineken
May 11, 2016 Key Highlight Global Leaders Amazon
May 5, 2016 Key Highlight Global Leaders Time Warner
May 4, 2016 Key Highlight Global Leaders CVS
April 29, 2016 Key Highlight Global Leaders Amazon
April 28, 2016 Key Highlight Global Leaders Facebook
April 27, 2016 Key Highlight Global Leaders Apple
April 22, 2016 Key Highlight Global Leaders Essilor
April 20, 2016 Key Highlight Global Leaders Johnson & Johnson
April 14, 2016 Key Highlight Global Leaders JPMorgan
April 13, 2016 Key Highlight Global Leaders Facebook
April 5, 2016 Weekly Report Thematic View Ctrip, Expedia, Priceline
April 1, 2016 Company Primer Thematic View Ctrip
April 1, 2016 Company Primer Thematic View Expedia
April 1, 2016 Company Primer Thematic View Priceline
March 31, 2016 Key Highlight M&A Hon Hai
March 16, 2016 Key Highlight Global Leaders Apple
March 10, 2016 Key Highlight Global Leaders Inditex
March 8, 2016 Weekly Report Thematic View 3M, GE, Honeywell, UTC
March 7, 2016 Key Highlight Global Leaders Novo Nordisk
March 4, 2016 Key Highlight Global Leaders Time Warner
February 23, 2016 Weekly Report Thematic View IBM
February 19, 2016 Key Highlight M&A IBM
February 2, 2016 Key Highlight Global Leaders Alphabet
January 29, 2016 Key Highlight Global Leaders Microsoft
January 28, 2016 Key Highlight Global Leaders Facebook
January 27, 2016 Key Highlight Global Leaders Apple
January 25, 2016 Key Highlight Earnings Eiffage
January 15, 2016 Key Highlight Global Leaders JPMorgan
January 13, 2016 Company Primer Global Leaders Accenture
January 13, 2016 Key Highlight Global Leaders Time Warner
January 8, 2016 Key Highlight Global Leaders Walgreens
January 7, 2016 Company Primer Thematic View Siemens
Disclaimer
20 September, 2016
Ucap Hong Kong Asset Management Ltd has issued this document for information purposes only. This document may not be distributed to the United States, Canada,
Australia or to any other jurisdiction in which its distribution is unlawful. If you require investment advice or wish to discuss the suitability of any investment decision,
you should contact your professional advisers for financial, legal or tax advice when appropriate. This document is not and should not be construed as an offer to sell
or a solicitation of an offer to purchase or subscribe for any investment or service.
Ucap Hong Kong Asset Management Ltd has based this document on information obtained from sources it believes to be reliable but which it has not independently
verified. Ucap Hong Kong Asset Management Ltd makes no guarantees, representations or warranties, and accepts no responsibility or liability as to its accuracy or
completeness. Expressions of opinion herein are subject to change without notice.
Members of the Ucap Hong Kong Asset Management Ltd and/or their officers, directors and employees may have positions in any securities mentioned in this
document (or any related investment) and may from time to time add to or dispose of any such securities (or investment).
In the case where this document is distributed in the United Kingdom by a person who is not authorized by the United Kingdom Financial Services Authority; it is only
intended for persons who (i) have professional experience in matters related to investments or (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth
companies, unincorporated associations, etc") of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended) or to whom it may
otherwise lawfully be communicated by such an unauthorized person (all such persons together being "relevant persons"). This communication must not be acted on
or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and
will be engaged in only with relevant persons.
Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not receive back
the full amount invested. When an investment is denominated in a currency other than your local or reporting currency, changes in exchange rates may have an
adverse effect on the value, price or income of that investment. In the case of investments for which there is no recognized market, it may be difficult for investors to
sell their investments or to obtain reliable information about their value or the extent of the risk to which they are exposed. Investment in any market may be
extremely volatile and subject to sudden fluctuations of varying magnitude due to a wide range of direct and indirect, influences. Such characteristics can lead to
considerable losses being incurred by those exposed to such markets.
© Copyright. Ucap Hong Kong Asset Management Ltd 2015 ALL RIGHTS RESERVED
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, whether electronic, mechanical,
photocopying, recording or otherwise, without the prior written permission of Ucap Hong Kong Asset Management Ltd.