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Source: Standard Chartered Research 1
Global and SSA outlook
Razia Khan, Chief Economist – Africa & the Middle East
February 2019
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Key themes in 2019 – Fighting the current
§ The tide is going out for the global economy
§ We expect 3.6% global GDP growth in 2019, down from 3.8% in 2018
§ Prior growth-supportive factors are now reversing:
§ End of QE era => Higher funding costs
§ End of US fiscal sugar rush
§ Demographic dividends turning into drags for many major economies (to worsen in the 2020s)
§ China less willing to use the credit engine to support growth this time
§ Globalisation facing bouts of protectionism – US-China trade war
Source: Standard Chartered Research 3US – Tight labour market, positive output gap justify hawkish Fed
US output gap is in positive territory Initial jobless claims indicate tight labour market
Output gap, % of potential GDP 4-wk average, IJC as % of US workforce, age 15-64
%
0.35%
6
Current
4
Japan 0.30%
2
0.25%
0
-2 0.20%
EU
-4
US 0.15%
-6
-8 0.10%
Jan-93 Jan-99 Jan-05 Jan-11 Jan-17 Jan-23 Sep-83 Sep-90 Sep-97 Sep-04 Sep-11 Sep-18
Source: IMF, OECD, Standard Chartered Research Source: Bloomberg, Standard Chartered Research
4US – Focused on the tight labour market, positive output gap
US FOMC hiking cycles usually end with policy rate above ‘neutral’
%, shaded area represents restrictive policy; i.e., where real FFTR is above r*
10 r* real FFTR nominal FFTR U-3, inverted, RHS 0
F/C
8
Periods where real FFTR 2
higher than r*
6
4
4
6
2
8
0
10
-2
-4 12
Dec-92 Mar-95 Jun-97 Sep-99 Dec-01 Mar-04 Jun-06 Sep-08 Dec-10 Mar-13 Jun-15 Sep-17 Dec-19
Source: Bloomberg, Federal Reserve Bank of San Francisco, Standard Chartered Research 5The reversal of QE means higher funding costs
Major central banks’ balance sheets are likely to contract further in 2019
Change in central bank balance-sheet size, USD tn, y/y (LHS); SPX index, % y/y (RHS)
2,400 Forecast 60
SPX (% y/y - RHS) Change in total
2,200
(Fed + ECB + BoJ) balance
2,000 sheet size (USD bn)
40
1,800
1,600
1,400
20
1,200
1,000
800 0
600
400
-20
200 USD 2.4tn USD 1.9tn USD 1.3tn USD 4.8tn
0
-200
-40
-400
-600
-800 -60
Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19
Source: Fed, BoJ, ECB, Bloomberg, Standard Chartered Research 6Widening US deficits to damage the USD medium-term
When do fiscal deficits matter for the USD?
USD narrow TWI (LHS) vs US fiscal + C/A deficits, % of GDP (RHS)
150 2
140
0
US twin deficits (RHS)
130
-2
120
-4
110
100 -6
90
-8
80
USD TWI (LHS)
-10
70
-12
60
50 -14
Jun-73 Jun-77 Jun-81 Jun-85 Jun-89 Jun-93 Jun-97 Jun-01 Jun-05 Jun-09 Jun-13 Jun-17
Source: Bloomberg, Standard Chartered Research 7China has reduced the credit intensity of GDP growth
Will China deliver another round of stimulus as growth slows?
China economic activity tracker, % (LHS); credit intensity – change in credit/change in nominal GDP, % (RHS)
16 China economic activity 600
tracker Instances where credit intensity was ramped
up as growth slowed
14
500
12
400
10
8 300
6
200
4
Credit intensity (RHS) 100
2
0 0
Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12 Mar-14 Sep-15 Mar-17 Sep-18
Source: Bloomberg, Standard Chartered Research 8Distribution of world GDP growth
China will become the second-largest economy in 2019, overtaking the euro area when measured by
nominal GDP at market exchange rates
Size represents 2019F percentage share of level of world GDP at market exchange rates; shade represents
whether share is increasing/decreasing vs past-5-year average
Decreasing Increasing
Source: IMF, Standard Chartered Research 9Distribution of world GDP growth (cont’d)
We expect global growth to moderate in 2019 versus 2018; euro area, MENA and the UK will expand at
a slower pace versus past-five-year levels
Size represents 2019F ppt contribution to world GDP growth at market exchange rates; shade represents rate
of contribution vs past-5-year average; percentages represent estimated share of world GDP growth in 2018
Fast Neutral Slow
Source: IMF, Standard Chartered Research 10Africa’s economic outlook
Africa – Recovery time?
Africa macroeconomic forecasts
GDP growth, % y/y
8
7
6
5
World
4
3
SSA
2
1
0
-1
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Source: IMF, Standard Chartered Research 12SSA GDP – Weakness was largely due to South Africa and Nigeria
SSA’s two largest economies saw modest growth improvements in 2017
GDP growth, % y/y
7
6
5
4
3
2 South
Africa
1
0
-1
-2 Nigeria
-3
Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
Source: NBS, STATS SA, Standard Chartered Research 13Standard Chartered Africa Business Insight surveys
Nigeria’s businesses are the most optimistic, Tanzania’s the least
Standard Chartered Africa Business Insight surveys (50=neutral)
100
90 Industry business conditions
(past 12months)
80
Business activity levels
70
(next 12months)
60
Breakeven=50
50
40
30
20
10
0
Nigeria Kenya Uganda Ghana Zambia Cote d'Ivoire Botswana Tanzania
§ Standard Chartered – Africa Business Insight (SC-ABI) surveys, compiled by IHS Markit, cover eight Sub-Saharan African
(SSA) economies: Botswana, Côte d’Ivoire, Kenya, Ghana, Nigeria, Tanzania, Uganda and Zambia.
§ The surveys are designed to give a unique perspective on the current and future business conditions, measuring
companies’ intentions for a range of business variables in the coming year.
§ The indicators offer an insight into what firms expect will be major positive and negative factors for their businesses in the
coming 12 months, as well as how conditions have changed in the past year.
Source: IHS Markit, Standard Chartered Research 14SSA – Growth still supported by global outlook
Emerging markets capture a larger share of Africa-China trade is growing again
Africa’s trade (Africa’s trade by region, USD bn) USD bn and % y/y
45 185 Trade, USD bn 80
Thousands
Thousands
(LHS)
Asia
40 % y/y (RHS)
excl.China 60
135
35
40
30
85
20
25
China 0
20
35
15
-20
Euro area
10 -15
-40
5 Middle East
US -65 -60
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
H1-18
Nov-08 Jan-10 Mar-11 May-12 Jul-13 Sep-14 Nov-15 Jan-17 Mar-18
Source: IMF, Standard Chartered Research Source: National sources, Standard Chartered Research
15SSA –Recovering, but in search of resilience
FX reserves have recovered since 2014, with Vulnerability to changing risk appetite
some exceptions Non-resident holdings of local currency public debt, %
FX reserves, USD bn 45
45
2018 (latest
available) 40
40
35 35
30 End-2014 30
25 End-2016 25
20
20
15
15
10
10
5
5
0
Nigeria
Angola
WAEMU
CEMAC
Kenya
Ghana
Tanzania
Zambia
Uganda
0
South Africa Ghana Zambia Nigeria Kenya
Source: Bloomberg, Standard Chartered Research 16SSA – Debt profile an important differentiator
Sizeable debt maturities raise refinancing needs Reform will be key to credit assessment
Eurobond maturities (USD bn) Eurobond spreads, bps
Ghana Kenya Zambia Zambin 2024 Ghana 2026 Nigeria 2027
6
Angola Nigeria Cote d'Ivoire IVTCST 2028 Senegl 2024 Gabon 2024
Cameroon Gabon Senegal Kenint 2024 Repcam 2025 Ethopi 2026
1,600
Repnam 2026 SOAF 2025
5
1,400
4 1,200
1,000
3
800
2 600
400
1
200
0
0
201
201
202
202
202
202
202
202
202
202
202
202
203
203
203
203
203
204
204
204
Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18
Source: Bloomberg, Standard Chartered Research 17SSA – Investors seek reassurance on reform
IMF and Africa Significant foreign holdings of domestic debt
Non-resident holdings of total local currency public
debt, %
Amount Date current 45
Country Current status
(USD mn) prog.
40
Angola EFF 3,700 2018/21
Cameroon ECF 666 2017/20 35
Côte d'Ivoire ECF/EFF 899 2016/19
30
Gabon ECF 642 2017/20
Ghana ECF 918 2015/19 25
SBA/SCF
Kenya 1,500 Expired in 2018 20
(precautionary)
Cancelled in 15
Mozambique In talks 282.9
2016
10
Senegal PSI* – 2015/18
Tanzania PSI* – 2014/18 5
Uganda In talks for PCI* – –
0
Zambia In talks – – South Africa Ghana Zambia Nigeria Kenya
Source: IMF, Standard Chartered Research * non-funded programmes Source: Local Authorities, Standard Chartered Research
18FX forecasts: Our view
Forecasts – FX
End-period forecasts versus the USD
Country Q1-19 Q2-19 Q3-19 Q4-19 2019 2020 2021 2022
Majors
Euro area 1.16 1.17 1.18 1.20 1.20 1.38 1.40 1.40
Japan 110.00 108.00 106.00 105.00 105.00 100.00 95.00 95.00
UK 1.36 1.38 1.40 1.42 1.42 1.47 1.49 1.50
Canada 1.28 1.26 1.25 1.24 1.24 1.10 1.09 1.08
Switzerland 0.99 0.98 0.97 0.96 0.96 0.85 0.84 0.84
Australia 0.74 0.75 0.76 0.78 0.78 0.84 0.80 0.80
New Zealand 0.68 0.70 0.72 0.74 0.74 0.78 0.74 0.74
Asia
Bangladesh 87.00 88.00 89.00 90.00 90.00 92.00 94.00 96.00
China 6.90 6.75 6.70 6.65 6.65 6.53 6.04 6.00
CNH 6.90 6.75 6.70 6.65 6.65 6.53 6.04 6.00
Hong Kong 7.84 7.84 7.83 7.83 7.83 7.80 7.77 7.77
India 73.00 74.00 74.50 75.00 75.00 76.00 77.00 78.00
Indonesia 14700.00 14800.00 14900.00 15000.00 15000.00 15100.00 15200.00 15300.00
Malaysia 4.20 4.25 4.25 4.30 4.30 4.10 4.20 4.20
Philippines 53.50 54.00 54.50 55.00 55.00 55.00 56.00 56.00
Singapore 1.37 1.37 1.38 1.38 1.38 1.38 1.39 1.39
South Korea 1160.00 1160.00 1180.00 1200.00 1200.00 1100.00 1050.00 1000.00
Sri Lanka 177.00 180.00 182.00 185.00 185.00 190.00 192.00 194.00
Taiwan 31.20 31.20 31.40 31.60 31.60 30.50 29.10 29.00
Thailand 33.00 33.00 33.25 33.50 33.50 33.50 34.00 34.00
Vietnam 23500.00 23400.00 23400.00 23300.00 23300.00 22700.00 21500.00 21300.00
MENAP
Bahrain 0.38 0.38 0.38 0.38 0.38 0.38 0.38 0.38
Egypt 17.94 17.98 18.03 18.08 18.08 18.25 18.40 18.60
Iraq 1182.00 1182.00 1182.00 1182.00 1182.00 1182.00 1182.00 1182.00
Jordan 0.71 0.71 0.71 0.71 0.71 0.71 0.71 0.71
Kuwait 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30
Lebanon 1507.50 1507.50 1507.50 1507.50 1507.50 1507.50 1507.50 1507.50
Oman 0.39 0.39 0.39 0.39 0.39 0.39 0.39 0.39
Pakistan 144.00 148.00 152.00 155.00 155.00 160.00 165.00 170.00
Qatar 3.64 3.64 3.64 3.64 3.64 3.64 3.64 3.64
Saudi Arabia 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75
Turkey 6.30 6.40 6.50 6.60 6.60 7.00 4.10 4.20
UAE 3.67 3.67 3.67 3.67 3.67 3.67 3.67 3.67
Source: Standard Chartered Research 20Forecasts – FX (cont’d)
End-period forecasts versus the USD
Country Q1-19 Q2-19 Q3-19 Q4-19 2019 2020 2021 2022
Africa
Angola 330.00 335.00 340.00 345.00 345.00 360.00 244.49 249.38
Botswana 10.50 10.44 10.37 10.26 10.26 9.77 9.62 9.77
Cameroon 565.50 560.60 555.90 546.60 546.60 475.30 468.50 468.50
Côte d’lvoire 565.50 560.60 555.90 546.60 546.60 475.30 468.50 468.50
The Gambia 51.50 52.03 52.95 53.50 53.50 56.97 59.84 63.00
Ghana 5.20 5.36 5.50 5.69 5.69 6.30 6.60 6.90
Kenya 104.20 104.90 106.00 106.20 106.20 106.00 107.00 107.50
Nigeria 371.00 373.00 375.00 376.00 376.00 383.00 385.00 388.00
Sierra Leone 8645.00 8703.00 8927.00 9160.00 9160.00 10296.00 10656.00 10901.00
South Africa 14.10 14.00 13.90 13.70 13.70 13.00 12.50 12.70
Tanzania 2340.00 2350.00 2380.00 2400.00 2400.00 2430.00 2450.00 2490.00
Uganda 3820.00 3890.00 3950.00 4010.00 4010.00 4150.00 4210.00 4270.00
Zambia 13.00 12.80 12.70 12.60 12.60 13.20 13.60 14.00
Emerging Europe
Czech Republic 21.81 21.54 21.27 20.83 20.83 17.39 17.14 17.14
Hungary 280.17 277.78 275.42 270.83 270.83 202.90 196.43 196.43
Poland 3.58 3.50 3.43 3.33 3.33 2.86 2.79 2.79
Russia 64.50 64.00 63.50 63.00 63.00 63.00 55.00 56.00
Latin America
Argentina 42.00 45.00 50.00 50.00 50.00 26.50 28.00 30.00
Brazil 3.50 3.40 3.75 3.75 3.75 3.20 3.50 3.75
Chile 700.00 710.00 725.00 740.00 740.00 580.00 575.00 600.00
Colombia 3000.00 2950.00 2950.00 3000.00 3000.00 3200.00 3400.00 3600.00
Mexico 19.25 19.50 20.50 21.50 21.50 17.50 18.00 18.50
Peru 3.40 3.40 3.25 3.30 3.30 3.10 3.36 3.30
Source: Standard Chartered Research 21Tanzania- Rising risks in
2019
February 2019
Sarah Baynton-Glen +44 207 885 2330
Sarah.Baynton-Glen@sc.com
Economist, Africa
Standard Chartered
If you are in scope for MiFID II and want to opt out of our Research services, please contact us.Growth has been robust
Strong growth from a regional perspective
GDP, % y/y
8
Tanzania
7
Kenya
6
5 Uganda
4
SSA
3
2
1
0
Jul-05 Jul-05 Jul-05 Jul-05 Jul-05 Jul-05
Source: IMF WEO, National statistics agencies, 23Inflation has been contained by soft food prices
Higher fuel prices offset by lower food prices, but potential risks ahead
Inflation, % y/y
25
20
Energy
15
Food
10
Headline CPI BoT target
5
0
-5
-10
Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18
Source: Tanzania Bureau of Statistics 24Improving private sector credit growth is key for the outlook
NPLs dropping, PSCE recovery Growth in credit is still negative for several sectors
PSCE, % y/y, NPLs % (RHS) Credit extension by sector, % y/y
35 14
PSCE NPLs Personal
30 12
Mining and quarrying
25 10
Manufacturing
20 8
Trade
15 6
Hotels and restaurants
10 4
Transport and communication
5 2 Agriculture
0 0 Building and construction Nov-18 Oct-18
1/1/2011
5/1/2011
9/1/2011
1/1/2012
5/1/2012
9/1/2012
1/1/2013
5/1/2013
9/1/2013
1/1/2014
5/1/2014
9/1/2014
1/1/2015
5/1/2015
9/1/2015
1/1/2016
5/1/2016
9/1/2016
1/1/2017
5/1/2017
9/1/2017
1/1/2018
5/1/2018
9/1/2018
-40 -20 0 20 40 60 80
-5 -2
Source: BoT 25In recent years expenditure has undershot targets
Fiscal deficits have undershot targets Expenditure execution has been slow
Fiscal deficit, % of GDP FY18 Expenditure, % of GDP
0 25
-0.5
20
-1
15
-1.5
-2 10
-2.5
5
-3
0
-3.5
-4
-4.5
-5 Budget estimates Preliminary actual
FY16 FY17 FY18 FY19
Source: MoFP
26Recent data points to an uptick in public sector activity
Public sector borrowing is rebounding
Net claims on central government (TZS bn and % y/
y)
6000 60
5000 40
4000 20
3000 0
2000 -20
1000 -40
0 -60
Jan-15 Oct-15 Jul-16 Apr-17 Jan-18 Oct-18
Source: BoT 27Narrow fiscal deficits have helped stabilise debt-to-GDP for now
Non-concessional and domestic financing
Rising public debt but still sustainable suggests higher costs
Debt-to-GDP, %
FY18, estimate, actual TZSbn (LHS)and % of
45
estimate (RHS)
1800 120
Estimate Actual Percentage of estimate
40 1600
100
1400
35
1200 80
30 1000
60
800
25
600 40
20 400
20
200
15
0 0
10
5
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: BoT, MoFP 28Disbursement of grants has fallen significantly
In July-November 2018, just 17.2% of budgeted grants were disbursed by development partners
Grants, TZS bn
1600
Thousands
200 Budget Actual
180 1400
160
1200
140
120 1000
100
800
80
600
60
40
400
20
200
0
7/1/2016
9/1/2016
11/1/2016
1/1/2017
3/1/2017
5/1/2017
7/1/2017
9/1/2017
11/1/2017
1/1/2018
3/1/2018
5/1/2018
7/1/2018
9/1/2018
11/1/2018
0
FY18 July- September October November
November
Source: BoT, MoFP
29Further TZS depreciation ahead
Pressure on the currency returning Despite lower fuel prices, USD/bbl
USD-TZS
90
2,320
80
2,310
70
2,300
60
2,290
50
2,280 Dec-17 Feb-18 Mar-18May-18 Jul-18 Aug-18Oct-18 Dec-18
2,270 Lack of cashew exports adding additional
pressure, cashew export season, exports USD
2,260 mn
150 Nov-Jan export
season
2,250
100
2,240
2,230 50
2,220 0
Jan-18Apr-18May-18Jul-18Aug-18Sep-18Nov-18Dec-18 Jun-11 Apr-12 Feb-13 Dec-13 Oct-14 Aug-15 Jun-16 Apr-17
Source: Bloomberg 30External pressures building
Reserves under pressure Early signs of a pick up in import demand
Reserves, USDmn, and months of imports Exports and imports, USDmn
6500 6.5 1,550
Months of imports
6 1,050
6000
5.5 550
5500 50
5
Oct-18 Apr-18 Oct-17 Apr-17 Oct-16 Apr-16 Oct-15 Apr-15
4.5 A wider C/A deficit driving BoP deficit
5000 BoP, current account, USDmn
4 2,000
Reserves (USD
bn)
4500 0
3.5
-2,000
-4,000
4000 3
-6,000
2014 2015 2016 2017 Year End
Nov 2018
Source: BoT, IMF, Reuters Datastream 31Global Disclaimer
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Nothing in this document constitutes a personal recommendation or investment advice as defined by MiFID II. Germany: In Germany, this document is being distributed by Standard Chartered Bank Germany Branch, which is also regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). Australia: The Australian Financial Services Licence for Standard Chartered Bank is Licence No: 246833 with the following Australian Registered Business Number (ARBN: 097571778). Australian investors should note that this communication was prepared for “wholesale clients” only and is not directed at persons who are “retail clients” as those terms are defined in sections 761G and 761GA of the Corporations Act 2001 (Cth). Bangladesh: This research has not been produced in Bangladesh. The report has been prepared by the research analyst(s) in an autonomous and independent way, including in relation to SCB. THE SECURITIES MENTIONED IN THIS REPORT HAVE NOT BEEN AND WILL NOT BE REGISTERED IN BANGLADESH AND MAY NOT BE OFFERED OR SOLD IN BANGLADESH WITHOUT PRIOR APPROVAL OF THE REGULATORY AUTHORITIES IN BANGLADESH. Any subsequent action(s) of the Recipient of these research reports in this area should be subject to compliance with all relevant law & regulations of Bangladesh; specially the prevailing foreign exchange control regulations. Botswana: This document is being distributed in Botswana by, and is attributable to, Standard Chartered Bank Botswana Limited, which is a financial institution licensed by Bank of Botswana under Section 6 of the Banking Act CAP 46.04 and is listed on the Botswana Stock Exchange. Brazil: SCB disclosures pursuant to the Securities Exchange Commission of Brazil (“CVM”) Instruction 598/18: This research has not been produced in Brazil. The report has been prepared by the research analyst(s) in an autonomous and independent way, including in relation to SCB. THE SECURITIES MENTIONED IN THIS REPORT HAVE NOT BEEN AND WILL NOT BE REGISTERED PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE COMMISSION OF BRAZIL AND MAY NOT BE OFFERED OR SOLD IN BRAZIL EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS AND IN COMPLIANCE WITH THE SECURITIES LAWS OF BRAZIL. China: This document is being distributed in China by, and is attributable to, Standard Chartered Bank (China) Limited which is mainly regulated by China Banking and Insurance Regulatory Commission (CBIRC), State Administration of Foreign Exchange (SAFE), and People’s Bank of China (PBoC). Hong Kong: This document (except any part advising on or facilitating any decision on futures contracts trading) is being distributed in Hong Kong by, and any part hereof authored by an analyst licensed in Hong Kong is attributable to, Standard Chartered Bank (Hong Kong) Limited 渣打銀行（香港）有限公司 which is regulated by the Hong Kong Monetary Authority. Insofar as this document advises on or facilitates any decision on futures contracts trading, it is being distributed in Hong Kong by, and any part hereof authored by an analyst licensed in Hong Kong is attributable to, Standard Chartered Securities (Hong Kong) Limited 渣打證券（香港）有限公司 which is regulated by the Securities and Futures Commission. India: This document is being distributed in India by Standard Chartered Bank, India Branch (“SCB India”). SCB India is a branch of SCB, UK and is licensed by the Reserve Bank of India to carry on banking business in India. SCB India is also registered with Securities and Exchange Board of India in its capacity as Merchant Banker, Investment Advisor, Depository Participant, Bankers to an Issue, Custodian, etc. For details on group companies operating in India, please visit https://www.sc.com/in/india_result.html. Indonesia: Standard Chartered Bank, Jakarta Branch is a banking institution duly registered with and supervised by the Indonesian Financial Service Authority. The information in this document is provided for information purposes only. It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or represent that any such future movements will not exceed those shown in any illustration. Future changes in such laws, rules, regulations, etc., could affect the information in this document, but SCB is under no obligation to keep this information current or to update it. Expressions of opinion are those of SCB only and are subject to change without notice. Japan: This document is being distributed to Specified Investors, as defined by the Financial Instruments and Exchange Law of Japan (FIEL), for information only and not for the purpose of soliciting any Financial Instruments Transactions as defined by the FIEL or any Specified Deposits, etc. as defined by the Banking Law of Japan. Kenya: Standard Chartered Bank Kenya Limited is regulated by the Central Bank of Kenya. The information in this document is provided for information purposes only. The document is intended for use only by Professional Clients and should not be relied upon by or be distributed to Retail Clients. Korea: This document is being distributed in Korea by, and is attributable to, Standard Chartered Bank Korea Limited which is regulated by the Financial Supervisory Service and Financial Services Commission. Macau: This document is being distributed in Macau Special Administrative Region of the Peoples' Republic of China, and is attributable to, Standard Chartered Bank (Macau Branch) which is regulated by Macau Monetary Authority. Malaysia: This document is being distributed in Malaysia by Standard Chartered Bank Malaysia Berhad only to institutional investors or corporate customers. Recipients in Malaysia should contact Standard Chartered Bank Malaysia Berhad in relation to any matters arising from, or in connection with, this document. Mauritius: Standard Chartered Bank (Mauritius) Limited is regulated by both the Bank of Mauritius and the Financial Services Commission in Mauritius. This document should not be construed as investment advice or solicitation to enter into securities transactions in Mauritius as per the Securities Act 2005. New Zealand: New Zealand Investors should note that this document was prepared for “wholesale clients” only within the meaning of section 5C of the Financial Advisers Act 2008. This document is not directed at persons who are “retail clients” as defined in the Financial Advisers Act 2008. NOTE THAT STANDARD CHARTERED BANK (incorporated in England) IS NOT A “REGISTERED BANK” IN NEW ZEALAND UNDER THE RESERVE BANK OF NEW ZEALAND ACT 1989, and it is not therefore regulated or supervised by the Reserve Bank of New Zealand. Pakistan: The securities mentioned in this report have not been, and will not be, registered in Pakistan, and may not be offered or sold in Pakistan, without prior approval of the regulatory authorities in Pakistan. Philippines: This document may be distributed in the Philippines by Standard Chartered Bank (Philippines) (“SCB PH”), which is regulated by Bangko Sentral ng Pilipinas (telephone no.: +63 708-7701, website: www.bsp.gov.ph). This document is directed to Qualified Buyers as defined under Section 10.1 (L) of Republic Act No. 8799, otherwise known as the Securities Regulation Code (“SRC”), other corporate and institutional clients only. This document is for information purposes only. SCB PH does not warrant the appropriateness and suitability of any security, investment or transaction that may have been discussed in this document with respect to any investor. Users of this document are required to undergo SCB’s appropriateness and suitability determination process prior to engaging with SCB on any transaction involving any of the securities that may have been mentioned in this document. Nothing in this document constitutes or should be construed as an offer to sell or distribute securities in the Philippines, which securities, if offered for sale or distribution in the Philippines, are required to be registered with the Securities and Exchange Commission unless such securities are exempt under Section 9 of the SRC or the transaction is exempt under Section 10 thereof. Singapore: This document is being distributed in Singapore by SCB Singapore branch (UEN No.:S16FC0027L) and/or Standard Chartered Bank (Singapore) Limited (UEN No.: 201224747C) only to Accredited Investors, Expert Investors or Institutional Investors, as defined in the Securities and Futures Act, Chapter 289 of Singapore. Recipients in Singapore should contact SCB Singapore branch or Standard Chartered Bank (Singapore) Limited (as the case may be) in relation to any matters arising from, or in connection with, this document. South Africa: Standard Chartered Bank, Johannesburg Branch (“SCB Johannesburg Branch”) is licensed as a Financial Services Provider in terms of Section 8 of the Financial Advisory and Intermediary Services Act 37 of 2002. SCB Johannesburg Branch is a Registered Credit Provider in terms of the National Credit Act 34 of 2005 under registration number NCRCP4. Thailand: This document is intended to circulate only general information and prepare exclusively for the benefit of Institutional Investors with the conditions and as defined in the Notifications of the Office of the Securities and Exchange Commission relating to the exemption of investment advisory service, as amended and supplemented from time to time. It is not intended to provide for the public. UAE: For residents of the UAE – Standard Chartered Bank UAE does not provide financial analysis or consultation services in or into the UAE within the meaning of UAE Securities and Commodities Authority Decision No. 48/r of 2008 concerning financial consultation and financial analysis. UAE (DIFC): Standard Chartered Bank, Dubai International Financial Centre (SCB DIFC) having its offices at Dubai International Financial Centre, Building 1, Gate Precinct, P.O. Box 999, Dubai, UAE is a branch of Standard Chartered Bank and is regulated by the Dubai Financial Services Authority (“DFSA”). This document is intended for use only by Professional Clients and is not directed at Retail Clients as defined by the DFSA Rulebook. In the DIFC we are authorized to provide financial services only to clients who qualify as Professional Clients and Market Counterparties and not to Retail Clients. As a Professional Client you will not be given the higher retail client protection and compensation rights and if you use your right to be classified as a Retail Client we will be unable to provide financial services and products to you as we do not hold the required license to undertake such activities. United States: Except for any documents relating to foreign exchange, FX or global FX, Rates or Commodities, distribution of this document in the United States or to US persons is intended to be solely to major institutional investors as defined in Rule 15a-6(a)(2) under the US Securities Exchange Act of 1934. All US persons that receive this document by their acceptance thereof represent and agree that they are a major institutional investor and understand the risks involved in executing transactions in securities. Any US recipient of this document wanting additional information or to effect any transaction in any security or financial instrument mentioned herein, must do so by contacting a registered representative of Standard Chartered Securities North America, LLC, 1095 Avenue of the Americas, New York, N.Y. 10036, US, tel + 1 212 667 0700. WE DO NOT OFFER OR SELL SECURITIES TO U.S. PERSONS UNLESS EITHER (A) THOSE SECURITIES ARE REGISTERED FOR SALE WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AND WITH ALL APPROPRIATE U.S. STATE AUTHORITIES; OR (B) THE SECURITIES OR THE SPECIFIC TRANSACTION QUALIFY FOR AN EXEMPTION UNDER THE U.S. FEDERAL AND STATE SECURITIES LAWS NOR DO WE OFFER OR SELL SECURITIES TO U.S. PERSONS UNLESS (i) WE, OUR AFFILIATED COMPANY AND THE APPROPRIATE PERSONNEL ARE PROPERLY REGISTERED OR LICENSED TO CONDUCT BUSINESS; OR (ii) WE, OUR AFFILIATED COMPANY AND THE APPROPRIATE PERSONNEL QUALIFY FOR EXEMPTIONS UNDER APPLICABLE U.S. FEDERAL AND STATE LAWS. Any documents relating to foreign exchange, FX or global FX, Rates or Commodities to US Persons, Guaranteed Affiliates, or Conduit Affiliates (as those terms are defined by any Commodity Futures Trading Commission rule, interpretation, guidance, or other such publication) are intended to be distributed only to Eligible Contract Participants are defined in Section 1a(18) of the Commodity Exchange Act. Zambia: Standard Chartered Bank Zambia Plc (SCB Zambia) is licensed and registered as a commercial bank under the Banking and Financial Services Act Cap 387 of the laws of Zambia and as a dealer under the Securities Act, No. 41 of 2016. SCB Zambia is regulated by the Bank of Zambia, the Lusaka Stock Exchange and the Securities and Exchange Commission. © 2019 Standard Chartered Bank. All rights reserved. Copyright in third party materials is acknowledged and is used under licence. You may not reproduce or adapt any part of these materials for any purposes unless with express written approval from Standard Chartered Bank. 33
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research report. On a general basis, the efficacy of recommendations is a factor in the performance appraisals of analysts.
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Continued on next page 34Global Disclaimer
Country-Specific Disclosures – This document is not for distribution to any person or to any jurisdiction in which its distribution would be prohibited. If you are receiving this document in any of the countries listed below, please note the following:
United Kingdom and European Economic Area: SCB is authorised in the United Kingdom by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. This communication is directed at persons
Standard Chartered Bank can categorise as Eligible Counterparties or Professional Clients (such persons being the target market of this communication following Standard Chartered Bank’s target market assessment) under the Markets in Financial Instruments Directive II
(Directive 2014/65/EU) (“MiFID II”). In particular, this communication is not directed at Retail Clients in the European Economic Area (as defined by MiFID II). Nothing in this document constitutes a personal recommendation or investment advice as defined by MiFID II.
Germany: In Germany, this document is being distributed by Standard Chartered Bank Germany Branch, which is also regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). Australia: The Australian Financial Services Licence for Standard Chartered
Bank is Licence No: 246833 with the following Australian Registered Business Number (ARBN: 097571778). Australian investors should note that this communication was prepared for “wholesale clients” only and is not directed at persons who are “retail clients” as those
terms are defined in sections 761G and 761GA of the Corporations Act 2001 (Cth). Bangladesh: This research has not been produced in Bangladesh. The report has been prepared by the research analyst(s) in an autonomous and independent way, including in relation to
SCB. THE SECURITIES MENTIONED IN THIS REPORT HAVE NOT BEEN AND WILL NOT BE REGISTERED IN BANGLADESH AND MAY NOT BE OFFERED OR SOLD IN BANGLADESH WITHOUT PRIOR APPROVAL OF THE REGULATORY AUTHORITIES IN
BANGLADESH. Any subsequent action(s) of the Recipient of these research reports in this area should be subject to compliance with all relevant law & regulations of Bangladesh; specially the prevailing foreign exchange control regulations. Botswana: This document is
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disclosures pursuant to the Securities Exchange Commission of Brazil (“CVM”) Instruction 598/18: This research has not been produced in Brazil. The report has been prepared by the research analyst(s) in an autonomous and independent way, including in relation to SCB.
THE SECURITIES MENTIONED IN THIS REPORT HAVE NOT BEEN AND WILL NOT BE REGISTERED PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE COMMISSION OF BRAZIL AND MAY NOT BE OFFERED OR SOLD IN BRAZIL
EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS AND IN COMPLIANCE WITH THE SECURITIES LAWS OF BRAZIL. China: This document is being distributed in China by, and is attributable to, Standard
Chartered Bank (China) Limited which is mainly regulated by China Banking and Insurance Regulatory Commission (CBIRC), State Administration of Foreign Exchange (SAFE), and People’s Bank of China (PBoC). Hong Kong: This document (except any part advising on
or facilitating any decision on futures contracts trading) is being distributed in Hong Kong by, and any part hereof authored by an analyst licensed in Hong Kong is attributable to, Standard Chartered Bank (Hong Kong) Limited 渣打銀行（香港）有限公司 which is regulated
by the Hong Kong Monetary Authority. Insofar as this document advises on or facilitates any decision on futures contracts trading, it is being distributed in Hong Kong by, and any part hereof authored by an analyst licensed in Hong Kong is attributable to, Standard
Chartered Securities (Hong Kong) Limited 渣打證券（香港）有限公司 which is regulated by the Securities and Futures Commission. India: This document is being distributed in India by Standard Chartered Bank, India Branch (“SCB India”). SCB India is a branch of SCB,
UK and is licensed by the Reserve Bank of India to carry on banking business in India. SCB India is also registered with Securities and Exchange Board of India in its capacity as Merchant Banker, Investment Advisor, Depository Participant, Bankers to an Issue, Custodian,
etc. For details on group companies operating in India, please visit https://www.sc.com/in/india_result.html. Indonesia: Standard Chartered Bank, Jakarta Branch is a banking institution duly registered with and supervised by the Indonesian Financial Service Authority. The
information in this document is provided for information purposes only. It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of
likely future movements in rates or prices or represent that any such future movements will not exceed those shown in any illustration. Future changes in such laws, rules, regulations, etc., could affect the information in this document, but SCB is under no obligation to keep
this information current or to update it. Expressions of opinion are those of SCB only and are subject to change without notice. Japan: This document is being distributed to Specified Investors, as defined by the Financial Instruments and Exchange Law of Japan (FIEL), for
information only and not for the purpose of soliciting any Financial Instruments Transactions as defined by the FIEL or any Specified Deposits, etc. as defined by the Banking Law of Japan. Kenya: Standard Chartered Bank Kenya Limited is regulated by the Central Bank of
Kenya. The information in this document is provided for information purposes only. The document is intended for use only by Professional Clients and should not be relied upon by or be distributed to Retail Clients. Korea: This document is being distributed in Korea by, and
is attributable to, Standard Chartered Bank Korea Limited which is regulated by the Financial Supervisory Service and Financial Services Commission. Macau: This document is being distributed in Macau Special Administrative Region of the Peoples' Republic of China,
and is attributable to, Standard Chartered Bank (Macau Branch) which is regulated by Macau Monetary Authority. Malaysia: This document is being distributed in Malaysia by Standard Chartered Bank Malaysia Berhad only to institutional investors or corporate customers.
Recipients in Malaysia should contact Standard Chartered Bank Malaysia Berhad in relation to any matters arising from, or in connection with, this document. Mauritius: Standard Chartered Bank (Mauritius) Limited is regulated by both the Bank of Mauritius and the
Financial Services Commission in Mauritius. This document should not be construed as investment advice or solicitation to enter into securities transactions in Mauritius as per the Securities Act 2005. New Zealand: New Zealand Investors should note that this document
was prepared for “wholesale clients” only within the meaning of section 5C of the Financial Advisers Act 2008. This document is not directed at persons who are “retail clients” as defined in the Financial Advisers Act 2008. NOTE THAT STANDARD CHARTERED BANK
(incorporated in England) IS NOT A “REGISTERED BANK” IN NEW ZEALAND UNDER THE RESERVE BANK OF NEW ZEALAND ACT 1989, and it is not therefore regulated or supervised by the Reserve Bank of New Zealand. Pakistan: The securities mentioned in this
report have not been, and will not be, registered in Pakistan, and may not be offered or sold in Pakistan, without prior approval of the regulatory authorities in Pakistan. Philippines: This document may be distributed in the Philippines by Standard Chartered Bank
(Philippines) (“SCB PH”), which is regulated by Bangko Sentral ng Pilipinas (telephone no.: +63 708-7701, website: www.bsp.gov.ph). This document is directed to Qualified Buyers as defined under Section 10.1 (L) of Republic Act No. 8799, otherwise known as the
Securities Regulation Code (“SRC”), other corporate and institutional clients only. This document is for information purposes only. SCB PH does not warrant the appropriateness and suitability of any security, investment or transaction that may have been discussed in this
document with respect to any investor. Users of this document are required to undergo SCB’s appropriateness and suitability determination process prior to engaging with SCB on any transaction involving any of the securities that may have been mentioned in this
document. Nothing in this document constitutes or should be construed as an offer to sell or distribute securities in the Philippines, which securities, if offered for sale or distribution in the Philippines, are required to be registered with the Securities and Exchange
Commission unless such securities are exempt under Section 9 of the SRC or the transaction is exempt under Section 10 thereof. Singapore: This document is being distributed in Singapore by SCB Singapore branch (UEN No.:S16FC0027L) and/or Standard Chartered
Bank (Singapore) Limited (UEN No.: 201224747C) only to Accredited Investors, Expert Investors or Institutional Investors, as defined in the Securities and Futures Act, Chapter 289 of Singapore. Recipients in Singapore should contact SCB Singapore branch or Standard
Chartered Bank (Singapore) Limited (as the case may be) in relation to any matters arising from, or in connection with, this document. South Africa: Standard Chartered Bank, Johannesburg Branch (“SCB Johannesburg Branch”) is licensed as a Financial Services
Provider in terms of Section 8 of the Financial Advisory and Intermediary Services Act 37 of 2002. SCB Johannesburg Branch is a Registered Credit Provider in terms of the National Credit Act 34 of 2005 under registration number NCRCP4. Thailand: This document is
intended to circulate only general information and prepare exclusively for the benefit of Institutional Investors with the conditions and as defined in the Notifications of the Office of the Securities and Exchange Commission relating to the exemption of investment advisory
service, as amended and supplemented from time to time. It is not intended to provide for the public. UAE: For residents of the UAE – Standard Chartered Bank UAE does not provide financial analysis or consultation services in or into the UAE within the meaning of UAE
Securities and Commodities Authority Decision No. 48/r of 2008 concerning financial consultation and financial analysis. UAE (DIFC): Standard Chartered Bank, Dubai International Financial Centre (SCB DIFC) having its offices at Dubai International Financial Centre,
Building 1, Gate Precinct, P.O. Box 999, Dubai, UAE is a branch of Standard Chartered Bank and is regulated by the Dubai Financial Services Authority (“DFSA”). This document is intended for use only by Professional Clients and is not directed at Retail Clients as defined
by the DFSA Rulebook. In the DIFC we are authorized to provide financial services only to clients who qualify as Professional Clients and Market Counterparties and not to Retail Clients. As a Professional Client you will not be given the higher retail client protection and
compensation rights and if you use your right to be classified as a Retail Client we will be unable to provide financial services and products to you as we do not hold the required license to undertake such activities. United States: Except for any documents relating to
foreign exchange, FX or global FX, Rates or Commodities, distribution of this document in the United States or to US persons is intended to be solely to major institutional investors as defined in Rule 15a-6(a)(2) under the US Securities Exchange Act of 1934. All US
persons that receive this document by their acceptance thereof represent and agree that they are a major institutional investor and understand the risks involved in executing transactions in securities. Any US recipient of this document wanting additional information or to
effect any transaction in any security or financial instrument mentioned herein, must do so by contacting a registered representative of Standard Chartered Securities North America, LLC, 1095 Avenue of the Americas, New York, N.Y. 10036, US, tel + 1 212 667 0700. WE
DO NOT OFFER OR SELL SECURITIES TO U.S. PERSONS UNLESS EITHER (A) THOSE SECURITIES ARE REGISTERED FOR SALE WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AND WITH ALL APPROPRIATE U.S. STATE AUTHORITIES; OR
(B) THE SECURITIES OR THE SPECIFIC TRANSACTION QUALIFY FOR AN EXEMPTION UNDER THE U.S. FEDERAL AND STATE SECURITIES LAWS NOR DO WE OFFER OR SELL SECURITIES TO U.S. PERSONS UNLESS (i) WE, OUR AFFILIATED COMPANY
AND THE APPROPRIATE PERSONNEL ARE PROPERLY REGISTERED OR LICENSED TO CONDUCT BUSINESS; OR (ii) WE, OUR AFFILIATED COMPANY AND THE APPROPRIATE PERSONNEL QUALIFY FOR EXEMPTIONS UNDER APPLICABLE U.S. FEDERAL
AND STATE LAWS. Any documents relating to foreign exchange, FX or global FX, Rates or Commodities to US Persons, Guaranteed Affiliates, or Conduit Affiliates (as those terms are defined by any Commodity Futures Trading Commission rule, interpretation, guidance,
or other such publication) are intended to be distributed only to Eligible Contract Participants are defined in Section 1a(18) of the Commodity Exchange Act. Zambia: Standard Chartered Bank Zambia Plc (SCB Zambia) is licensed and registered as a commercial bank
under the Banking and Financial Services Act Cap 387 of the laws of Zambia and as a dealer under the Securities Act, No. 41 of 2016. SCB Zambia is regulated by the Bank of Zambia, the Lusaka Stock Exchange and the Securities and Exchange Commission.
© 2018 Standard Chartered Bank. All rights reserved. Copyright in third party materials is acknowledged and is used under licence. You may not reproduce or adapt any part of these materials for any purposes unless with express written approval from Standard Chartered
Bank.
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