January 2013

GLOBAL MARKET PROSPECTS: WHAT THE CHARTS SAY!

First Quarter 2013
Stphanie Ayms Phone: + 44 (0) 207 762 5898 stephanie.aymes@sgcib.com Loic de Galzain Phone: + 33 (0) 1 42 13 47 12 loic.de-galzain@sgcib.com

Important Notice: The circumstances in which this publication has been produced are such that it is not appropriate to characterise it as independent investment research as referred to in MiFID and that it should be treated as a marketing communication even if it contains a research recommendation. This publication is also not subject to any prohibition on dealing ahead of the dissemination of investment research. However, SG is required to have policies to manage the conflicts which may arise in the production of its research, including preventing dealing ahead of investment research. Societe Generale (SG) does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that SG may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. PLEASE SEE APPENDIX AT THE END OF THIS REPORT FOR THE ANALYST(S) CERTIFICATION(S), IMPORTANT DISCLOSURES AND DISCLAIMERS AND THE STATUS OF NON-US RESEARCH ANALYSTS.

OUR MAIN CALLS

Euro-denominated assets to keep brightening until spring/summer (p8)

As highlighted in our previous What the charts say! last October, the easing of financial tensions in Europe has resulted in the confirmation of major trend reversal technical patterns on the Euro vs. all currencies, European sovereign CDSs and coreperipheral bond spreads and on the equity financial sector. The combined view on the EUR/USD and on European indices suggests they will outperform further into Q1/Q2 but the timing will be critical then.
Commodities and emerging equities disconnect? (p25)

Except for Gold, where we expect prices to rally and peak between $1,800/$1,921 before starting a gradual decline in H2, commodities should recover overall, but with limited upside. On the other hand, the MSCI emerging is set to outperform (+20%) towards 2008 tops.
Still some action in the FX space (p33)

In our previous report, we anticipated the major trend reversals on the JPY and the GBP. Even though these bearish trends prevail, we are getting indications that a pause is long overdue. Also, our attention now goes to the NOK and the AUD, more specifically on the EUR/NOK and the EUR/AUD as they may well be the next main FX movers. They are, in our view, completing four years of correction and have been showing signs of fatigue of late.
Cherry picking on rates (p19)

While our central call for the US rates to bottom out still prevails, we believe UST10 yields may be entering the accumulation phase soon, and hence it could experience some hiccups along the way. The recent developments on European short-end rates are of particular interest as we see on Schatz and especially on Euribor the confirmation of major trend reversal patterns. We also identify some interesting convergence opportunities, with European peripheral bonds tightening the gap with the core, as well as certain opportunities among core bonds.
Despite recent strength, our core scenario remains bullish on US equities which is maturing (p41)

Although the distribution phase has not started yet, the SP500 is gradually rising towards the multi-year high at 1550/75. The US High Yield index is also closing in on pre-crisis levels with a marked lack of momentum on indicators.

INDEXES: MAJOR PEAK UNLIKELY UNTIL SPRING 2013

Indexes

Europe - intermediate outperformance Targets : Eurostoxx50: 1/ 3000 pts; 2/ 3300 CAC 40: 4000/4100 pts 2/ 4400 US: much more limited potential Target: S&P 500: 1/ 1550 +/- 2/ 1666 Global Emerging Markets: outperformance, but range-bound MT

Europe/Sectors Outperformance: Financials (Banks & Insurance) Consumer Staples - Pharma/Health - HPC Food & Beverages Luxury Goods - Chemicals Underperformance Utilities, Basic Ressources (positive ST), Building Materials, Tobacco, Oil Services Neutral (relative accumulation): Integrated oils, Telecoms

Equity

INDEXES - TARGETS

Target 1 S&P 500 Nikkei 225 DJStoxx 600 FTSE 100 Eurostoxx50 CAC 40 Dax IBEX MIB 1550 11 400 315 6750 /6900 +/-50 3000 4000-4100 8130 9050 18000

Target 2 1660 12 875 335 7700 3300 4400 9000 9800/9900 19750

Source: SG Cross Asset Research

MSCI WORLD ($)

Intermediate positive trend

- exit from the triangular congestion zone above 340 pts.

Beyond immediate resistance at

360: - Target 1/ 385 (triangle target) - Potential: 410/420 +15 % A move above 360 should spark entry flows with the risk of a bubble forming.

For now, entry volumes are identifiable in Japan and China.

For the eurozone: Ireland, Portugal, Spain, Italy. Since January, they have focused on the banking sector.

Source: Reuters

VOLUMES & ON-BALANCE VOLUMES, VERY CONCENTRATED FOR NOW....

Japan China

Portugal

Ireland

Source: Reuters

VS MSCI WORLD (ADJUSTED FOR FOREX MOVEMENTS)

Outperforming

- Europe - Emerging

Underperforming - US - Japan

Source: SG Cross Asset Research,

Waldata

EUROPE: TARGET 1/ 3000 +/- (+10 %) 2/ 3300 +/- (+ 23 %)

Eurostoxx50

ST resistance: 2800 +/- 10 pts . The risk of sharp downward

consolidation appears very limited considering the strength of the trend.

ST resistance: 2800 +/- 20 pts

Target 1/ 3000 +/- (+10 %) 2/ 3300 +/- pts (+ 23 %)

But, LT trend remains negative. A/B/C type technical recovery

since 2009.

Source: Reuters

EUROPE
DJStoxx 600 res 1/ 290/292 target 1/ 315 (+10 %) 2/ 345/350 +20%
Eurozone: stress reduction

- Targeted inflows: solid flowback volumes (Ireland, Portugal, Italy and Spain).
Indexes: recovery phase out to

next spring - Outperformance vs MSCI World - Southern Europe: the strong intermediate recovery is not over yet.
But, the LT trend remains

negative with the risk of a major peak between March/April and June/July 2013.

Source: Reuters

CAC 40 TARGET 1/ 4000-4100 2/ 4400 4500 (+ 20 %)

CAC 40 CAC 40 in $ + 16 %

Source: Reuters

10

FTSE 100 : TARGET 1/ + 8 % 2/ +20%

Vs DJ Stoxx on support

Source: Reuters

11

EUROPE SECTOR VS DJSTOXX. CHANGE OF TACK

Telecoms: MT support accumulation vs negative
Integrated Oils accumulation vs neutral Oil services: still negative

Energy Equip vs Integrated Oils Risk 1 : 16 %

Source: Reuters

12

EUROPE SECTOR VS DJSTOXX. NEGATIVE MT

Utilities Real Estate Tobacco risk 1/ v-20 %

Basic Ress. (oversold ST but cycle peak in past)

Building materials

Source: Reuters

13

EUROPE SECTOR VS DJSTOXX. POSITIVE MT

Food & Beverages Pharma

Banks

Chemicals

Source: Reuters

14

EUROPE, COUNTRY
Ireland Target 1/ 3950 2/ 4500
Italy MIB Target 23 000

Austria ATX target 3000

Greece. First target hit at 1,000. Target 2/ 1,200

Source: Reuters

15

EUR/USD: THE COMPELLING SIMILARITIES (PRICE TIME AND RANGE) WITH 2008/2009 AND 2010/2011 HELPS TO FORECAST 1.3835/1.4250 IN H1
Indicators and prices bounced off long-term supports

(1.20/1.22) and are gearing up to test the five-year resistance at 1.4250

Since 2008, each correction/impulsion in abc, lasting

either 6 or 12 months, with impulsions retracing 61.8%/76.4% of the previous correction.

76.4% 61.8% 61.8%

5/6-12 months 6 months

EUR/USD, monthly chart. Source: CQG

16

EUR/USD: DEFINITE BUY SIGNALS PROMPTED BUT SHORT-TERM RESPITE IS NEEDED

Double buy signal by breaking the bearish channel upward (1.2660/20) and confirming the inverted Head

and Shoulders pattern (1.2970,potential 1.4250). The weekly momentum indicators and the net noncommercial open interest are at absolute levels and hence need to pause.

EURUSD, weekly chart. Source: CQG

EURUSD, weekly charts. CFTC non-commercial net futures positions. Source: Bloomberg

17

EUR/USD: POSSIBLE PAUSE FIRST BEFORE HEADING FOR 1.3835 AND 1.4250
Timing suggests a further

rise into Q1 or even Q2 2013

The pair might ease back to the Head and Shoulders neckline at 1.2970 or even 1.2660/20. This will enable indicators to ease and gain upside potential. The EUR/USD will then rally to 1.3835 and 1.4250.

EURUSD, weekly charts. Source: CQG

18

EURIBOR JUNE13: A COMBINATION OF TWO BEARISH REVERSAL PATTERNS

Prices should gradually bend

towards the starting point of these reversal patterns (99.05)

Since autumn 11, the euribor has been gradually climbing within a rising wedge, i.e. prices have been enjoying an uptrend but amplitude has been contracting, hence highlighting the maturing uptrend. Late 2012, the Euribor broke the wedges lower support line (red dashed line). In addition to the wedge, the euribor formed and confirmed a long reversal pattern (Rounding Top). This pattern, albeit rare, materialises at the end of a sustained trend. 99.05

EuriborM3-EuriborM4

set

to

widen towards 48/53

The spread broke the steep two-year tightening channel upwards and most likely completed a standard a/b/c/ correction last December. Daily indicators have been diverging from prices (i.e. moving in the opposite direction since 35/37).
ERM3, daily chart (log. scale),Source: Bloomberg

19

SCHATZ YIELD: IS STABILIZING ABOVE THE MULTI-YEAR TREND LINE AND A FURTHER RALLY WILL SEE ITS SPREAD TIGHTEN OVER US2Y TO -41/-61
The monthly indicators have also bounced off the multi US2Y-EU2Y spread hit then rejected the key resistance zone of

year support line and been diverging since May 10 (0.37%), which is also the Double Bottoms potential.

36. Like for every bearish reversal, it saw the formation of a Double Top, hence it should narrow towards the support line at -41/-61.

Schatz, monthly and daily charts. Source: CQG

US2Y-EU2Y, monthly chart. Source: CQG

20

EUR 2S5S10S FLY (PAY 5Y): 38 WILL BE DECISIVE

The 2s5s10s Fly has established itself within the upper part of the long-term range (38-77). However the recent

break below the rising wedge and the persisting divergences on indicators suggest it will edge lower to 20/16.

EUR 2s5s10s (pay 5Y),weekly chart.Source: Bloomberg

EUR 2s5s10s (pay 5Y),weekly chart. Source: Bloomberg

21

EUROPEAN CORE BONDS: 10Y FRANCE AND THE NETHERLANDS SPREADS OVER GERMANY ARE NOW TESTING CRUCIAL SUPPORTS
The 10Y OAT-BUND spread has stabilised above the 5-

year channel support and the top of summer 11 at 55/45. It could potentially be forming a Double Bottom (80/87).

10Y GUILDER-BUND spread is completing a 4-year standard a/b/c/ flat correction. It should establish itself above the channel support at 13/10. Indicators have been diverging for a year (25/28).

OAT10Y-BUND10Y, daily chart. Source: Bloomberg

GUILDER10Y-BUND10Y, daily chart. Source: Bloomberg

22

EUROPEAN PERIPHERAL BONDS: MAJOR BEARISH REVERSAL PATTERNS TRIGGERED LAST SUMMER, THE CONVERGENCE WITH CORE IS UNDERWAY
Most definite configurations are 10Y spreads

between Portugal/Spain and Germany...

...where a rounding top and a head-and-shoulders pattern were confirmed for the former, and a break below the 2-year wedge for the latter.

OT10Y-BUND10Y and BONOS10Y-BUND10Y daily charts. Source: Bloomberg

23

EUROPEAN PERIPHERAL BONDS: BTP AND 10Y BTP-BUND SPREAD AT KEY SUPPORTS
10Y spread between Italy and Germany will

have to break below 253 to catch up.

It is breaking below the 5Y channel support but a clear break below 253 will confirm a major Double Top pattern. The BTP10Y is closing in on the broadening triangle support which has been developing since 2006, at 3.90%. 3.90% is also the steep corrective channel support which has been framing the correction since late 2011.

BTP10Y-BUND10Y, BTP10Y (log. scale) daily charts. Source: Bloomberg, CQG

24

MSCI WORLD EMERGING ($) ST PAUSE BELOW 1090, TARGET 1325

Source: Reuters

25

GOLD SPOT: THE CORRECTION WHICH STARTED IN SEPT. 11 IS COMPLETE

Indicators suggest Gold has

bottomed out (at 1522 last April/May)

The rally has been parabolic since 2009, i.e. the break above the multiyear channel at 1045. Gold has never closed below the monthly moving average since then. It has been acting as a reliable support during all corrections. It is at 1672 this month. The Stochastic indicator has settled in bullish territory i.e. 70/75% for a long-time now (since mid-2003). It therefore lends weight to the bullish trend. Last April/May it pulled back to the support zone corresponding to the corrections of October 06 and 08 (see arrows) and has tilted upwards. The indicator suggests the correction ended in April/May. Now, the Stochastic needs to break above the moving average (see ellipse, red curve) to spark a sustained buy signal.

Gold spot, quarterly chart. Source CQG

26

GOLD SPOT: THE OVERALL LONG-TERM UPTREND PERSISTS, BUT IT IS DE-STEEPENING

The break below the uptrend since

2008 was not fuelled by new sellers

Like in 2008 (see red ellipse) bearish engulfing patterns formed in August/September11. After the strong rally and the all-time high printed in September 11 the opening price was equal to that of August (at 1803/1827) but Gold reversed sharply, so much that the monthly closing price was below the August one (1623). The candlestick body in September (i.e. the difference between the opening and closing price) engulfs that of August. The last buyers are swept away. However, in this instance, there was no bearish monthly close the following month. This suggests that, although there was a sudden increase in the bearish force, the bears havent taken over.
Shallower correction but longer (offsetting)

4-month correction 4-month rally

Last May, Gold broke below the very steep rising channel which was containing the rise since late 2008 but this signal was not followed by an overall collapse of the flat price. This break is more likely the result of the inertia in prices. Indeed, Gold has been moving within a lengthy sideways/flat consolidation channel between 1522 and 1803/1827 and has briefly re-integrated the former channel lately.
Timing suggests a pause as Gold has been

correcting lower for four months

Gold spot, monthly chart. Source CQG

27

GOLD: EVERY CORRECTION SAW FORMATION OF INVERTED HEAD AND SHOULDERS. ONE HAS BEEN TAKING SHAPE SINCE DEC.11, TRIGGER IS 1803
A Head and Shoulders is also being formed on the Dollar Index and will trigger in break of 79.

Source: Gold spot (log) and Dollar index, weekly charts. Source CQG

28

GOLD: THE NET OPEN INTEREST REMAINS OVERALL LONG, LIKE PRICES IT BOUNCED OFF SUPPORT LAST MAY
Gold and CFTC net non-commercial: support hit

last May

Gold and Risk Reversal 1M: testing interim support

Source: Bloomberg, daily chart

Source: Bloomberg, daily chart

29

LONG-TERM SCENARIO: GOLD IS DUE TO HIT 1803/1921 IN H1 2013. IT MAY BE THE FINAL WAVE THOUGH.
The correction from August 11

to May 2012 is most likely a wave 4//

This correction aimed to retrace the rally from July 09 up to August 11 top. Gold hit the 38.2% retracement 3 times at 1522. These corrections are most of the time shallow and interpreted as a pause within the overall up trend.

But the rally to come may be

the final one for a little while, hence completing a 5// wave sequence
Given the various points outlined in the previous pages it looks like the up trend remains in place but starting to run out of steam. This supports the idea that a final up wave (labelled 5//) has been unfolding since last May but sometimes this final wave can take shape with various forms: either standard or extreme i.e. the panic rally like in August 11 or a failure. In the last instance, Gold would hit the all-time high at 1921 or even a touch higher but would reverse downward very soon after.
Gold spot, weekly charts. Source CQG

30

BRENT: IT LOOKS LIKE A PULLBACK.

The steep bullish dynamic since 2008 is broken, crude oil near the upper part of the 1.5 year range

Brent active monthly continuation chart. Source: CQG

31

BRENT: RANGE-BOUND CONFIGURATION

Brent (June13) is drifting higher towards the upper part of the 2-year range at 113 and 118 but with a lack

of momentum.

Brent June 13, weekly chart. Source: CQG

Brent June 13, weekly chart Source: Bloomberg

32

EUR/GBP: MAJOR LONG-TERM SUPPORT HIT AT 0.7750/0.7690. PAIR IS HEADING TOWARDS THE 5Y CHANNEL RESISTANCE AT 0.8640/0.8780
The pair hit a major support

last summer at 0.7750/0.7690. Only a break above the 5-year channel resistance/pennant at 0.8640/0.8780 will reverse the 4-year bearish trend.
0.7750/0.7690 is the 50% retracement, but also the pennants lower limit in place since 2008. Monthly leading indicators are reversing up. The weekly TD sequential indicator, which aims to identify price exhaustion and spot market bottoms/tops, prompted a buy signal and highlights the risk zone of 0.7690 (dashed pink line). Such a buy signal occurred in 2010, when the EUR/GBP enjoyed a rally towards the pennants upper limit and the reference level of the previous downtrend (red dashed line). When applying the same rule, the objective for the current rally is 0.8780.
EURGBP, monthly chart. Source: CQG

33

EUR/GBP: DEFINITE BULLISH SIGNALS BUT RISK OF A SHORT-TERM PAUSE

Closing in on initial

significant resistances
The pair broke above the steep corrective channel, thereby validating the inverted Head and Shoulders pattern with a break above 0.8160/0.8230 and reached the potential at 0.8580. The weekly momentum indicator (here weekly Stochastic), which aims to detect any possible oversold/overbought configuration, hit the peaks of 2011, 2009 and 2008. A consolidation is overdue.

EURGBP, weekly chart. Source: CQG

34

USD/JPY: THE BULLISH TREND REVERSAL PREVIOUSLY SPOTTED IS TAKING PLACE

Major support reached at 75.50

followed by a one-year accumulation which formed a major bottom reversal (Inverted Head and Shoulders)
The pair reached the long-term descending channel support and the correction has been desteepening ever since. The USD/JPY breached the resistance line (red dashed line) with indicators diverging since 2009. The pair is most likely retracing the 6year correction and should head towards the graphic levels of 95.00, most importantly to 100.00/101.75, that is the congestion of 2000 to 2008 and the beginning of massive yen strength.

Despite the parabolic rally, a

pause will have to take place (to 85.55)...

...as monthly indicators are at resistance and the pair is nearing the potential for the inverted Head and Shoulders (91.50/92.00).
USDJPY, monthly and weekly charts. Source: CQG

35

EUR/JPY: 4-YEAR CORRECTION COMPLETED BY THE BREAK ABOVE THE FALLING WEDGE
The pair hit the lower limit of

the exhaustion pattern (Wedge) then broke above it (104.60)

It hit both the wedges lower limit and the Fibonnacci projection at 92.80. The break above the wedges upper limit prompted a definite buy signal with monthly indicators flipping over into positive territory for the first time since 2008.

The

current rally aims to retrace the 4-year correction, with projected targets at 132/138.77 but a consolidation is close at hand...

...as the pair is nearing the resistance of 123.37 which is composed of April 11 tops and 38.2% retracement.

EUR/JPY, monthly and weekly charts

Source: CQG

36

NIKKEI 225: NEGATIVE VS MSCI WORLD RESISTANCE 1/ 11,300 2/ 12,680

Source: Reuters

37

PAIRS WHICH WILL MOST LIKELY CATCH UP: EUR/NOK AND USD/NOK
The EUR/NOK hit the lower part of the long-term broadening The USD/NOK is potentially forming an inverted head and

triangle and is completing a 4-year correction. The break above the falling wedge at 7.50/67 will prompt definite buy signals.

shoulders pattern. The break of 6.00/6.10 will prompt a double buy signal (head and shoulders confirmation and the multi-year channel resistance).

EUR/NOK, monthly and weekly charts. Source: CQG

USD/NOK, weekly chart.

Source: CQG

38

PAIRS WHICH WILL MOST LIKELY CATCH UP: EUR/AUD

The pair hit a multi-year low at 1.17/1.16, The TD sequential indicator also prompted a monthly buy signal and highlights the risk zone of

1.17. A major inverted head and shoulders pattern (potential at 1.4270) is being formed and will be confirmed by a break above 1.3027.

EUR/AUD, monthly charts. Source: CQG, Bloomberg

EUR/AUD, weekly chart. Source: CQG

39

PAIRS WHICH WILL MOST LIKELY CATCH UP: EUR/CZK

The long-term bearish signals are gradually receding. The EUR/CZK is slowly forming a bullish pattern (Cup and

Handle). This kind of configuration happens after a sharp but brief rally (2008/2009) and is followed by a prolonged consolidation. 25.90 will confirm the pattern.

EUR/CZK, monthly chart. Source: CQG, Bloomberg

EUR/CZK, weekly chart. Source: CQG

40

US: S&P 500 TARGET 1/ 1550 (5%) 2/ 1660 (13%)

The recovery trend since 2009

still has all the characteristics of a major technical recovery with the minimum target at 1550+/10pts (weekly closing 1575 on daily extremes) and immediate support at 1470/65, S2 1340.
The target for this major B

wave, initially set at +/- 1550 is likely to increase to 1660/70 by next June/July.
Positive factors prevail:

Positive Advance/Decline, new historical peak on the Russel 2000, and the Dow Transport.

Source: Reuters

41

US HIGH YIELD (5Y): IS EDGING HIGHER TOWARDS PRE-CRISIS LEVELS BUT THE UPTREND IS RUNNING OUT OF STEAM
104.45/105.00 is the main

resistance region to watch: this is the all-time high (the pre-crisis level) and the top from early 2011.
Overall, the index has been evolving within the upper part of the long-term range, between 86.50 and 104.45/105.00. The indicators are toying with the overbought zone.

Similarities between the

current uptrend and that of mid-2010/early 2011

Both were contained within a rising channel, the current uptrend could also be developing within a falling wedge. The wedge underlines the levels of 105.00 and 97.00.

High Yield (Markit CDX 5Y). Source Bloomberg

42

UST10Y IN YIELD: HIT THE MULTI-DECADE DECLINING CHANNEL SUPPORT, MONTHLY INDICATORS ARE FLASHING EARLY BULLISH SIGNALS
1.38%-1.00% is the major

support zone...
...made up of the long-term channels lower limits as well as the steeper one which has been developing since 2007.

The monthly MACD also hit support (last time being early 2009) and is breaking the signal curve (red line as indicated by the blue arrow).

UST10Y in yield, monthly chart. Source: CQG

43

UST10Y IN YIELD: IS BOTTOMING OUT BUT THERE COULD BE SOME HICCUPS ALONG THE WAY
The fall in yield since early

2011 is over. UST10 has entered into the accumulation phase in other words the primary uptrend is slowly building, but it will certainly be marked by price consolidation.
A clear and visible 5-wave sequence is complete and UST10Y (in yield) broke above the steep resistance line in place since early 2011 (at 1.25%). It has gradually recovered towards the first resistance zone at 2.00/2.09% which consists of the 23.6% retracement of the correction form early 2011 to July 2012 and of the congestion of September 11 to May 12. The weekly RSI broke the resistance line since 2011 too (red dashed line) but is approaching initial resistance.

UST10Y in yield, daily chart. Source: CQG

44

DISCLAIMER
ANALYST CERTIFICATION Each author of this research report listed on the cover hereby certifies that the views expressed in the research report accurately reflect his or her personal views, including views about subject securities or issuers mentioned in the report, if any. No part of his or her compensation was, is or will be related, directly or indirectly to the specific recommendations or views expressed in this report. The analyst(s) who author research are employed by SG and its affiliates in locations, including but not limited to, Paris, London, New York, Hong Kong, Tokyo, Bangalore, Madrid, Milan, Warsaw and Moscow. The information herein is not intended to be an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities or other financial instrument and including any expression of opinion, has been obtained from or is based upon sources believed to be reliable but is not guaranteed as to accuracy or completeness although Socit Gnrale (SG) believe it to be fair and not misleading or deceptive. Information concerning conflicts of interest and SGs management of such conflicts is contained in the SGs Policies for Managing Conflicts of Interests in Connection with Investment Research which is available at https://www.sgresearch.com/Content/Compliance/Compliance.aspx. SG, and their affiliated companies in the SG Group, may from time to time deal in, profit from the trading of, hold or act as market-makers or act as advisers, brokers or bankers, in relation to the securities, or derivatives of persons, firms or entities mentioned in this publication, or be represented on the board of such persons, firms or entities. Employees of SG, and their affiliated companies in the SG Group, or individuals connected to them may from time to time have a position in or be holding any of the investments or related investments mentioned in this publication. SG and their affiliated companies in the SG Group are under no obligation to disclose or take account of this publication when advising or dealing with or for their customers. The views of SG reflected in this publication may change without notice. To the maximum extent possible at law, SG does not accept any liability whatsoever arising from the use of the material or information contained herein. Dealing in warrants and/or derivative products such as futures, options, and contracts for differences has specific risks and other significant aspects. You should not deal in these products unless you understand their nature and the extent of your exposure to risk. This publication is not intended for use by or targeted at retail customers. Should a retail customer obtain a copy of this report they should not base their investment decisions solely on the basis of this document but must seek independent financial advice. The financial instrument discussed in this report may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein. The value of securities and financial instruments is subject to currency exchange rate fluctuation that may have a positive or negative effect on the price of such securities or financial instruments, and investors in securities such as ADRs effectively assume this risk. SG does not provide any tax advice. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. Investments in general and derivatives in particular, involve numerous risks, including, among others, market, counterparty default and liquidity risk. Trading in options involves additional risks and is not suitable for all investors. An option may become worthless by its expiration date, as it is a depreciating asset. Option ownership could result in significant loss or gain, especially for options of unhedged positions. Prior to buying or selling an option, investors must review the "Characteristics and Risks of Standardized Options" at http://www.optionsclearing.com/publications/risks/riskchap.1.jsp. CONFLICTS OF INTEREST This research contains the views, opinions and recommendations of Socit Gnrale (SG) analysts and/or strategists. Analysts and/or strategists routinely consult with SG sales and trading desk personnel regarding market information including, but not limited to, pricing, spread levels and trading activity of a specific fixed income security or financial instrument, sector or other asset class. Trading desks may trade, or have traded, as principal on the basis of the analyst(s) views and reports. In addition, analysts receive compensation based, in part, on the quality and accuracy of their analysis, client feedback, trading desk and firm revenues and competitive factors. As a general matter, SG and/or its affiliates normally make a market and trade as principal in fixed income securities discussed in research reports. Notice to French Investors: This publication is issued in France by or through Socit Gnrale ("SG") which is authorised and supervised by the Autorit de Contrle Prudentiel and regulated by the Autorite des Marches Financiers. Notice to U.K. Investors: This publication is issued in the United Kingdom by or through Socit Gnrale ("SG"), London Branch. Socit Gnrale is a French credit institution (bank) authorised and supervised by the Autorit de Contrle Prudentiel (the French Prudential Control Authority). Socit Gnrale is subject to limited regulation by the Financial Services Authority (FSA) in the U.K. Details of the extent of SG's regulation by the FSA are available from SG on request. The information and any advice contained herein is directed only at, and made available only to, professional clients and eligible counterparties (as defined in the FSA rules) and should not be relied upon by any other person or party. Notice to Polish Investors: this publication has been issued in Poland by Societe Generale S.A. Oddzial w Polsce (the Branch) with its registered office in Warsaw (Poland) at 111 Marszakowska St. The Branch is supervised by the Polish Financial Supervision Authority and the French Autorit de Contrle Prudentiel. This report is addressed to financial institutions only, as defined in the Act on trading in financial instruments. The Branch certifies that this publication has been elaborated with due diligence and care. Notice to US Investors: SG research reports issued by non-US SG analysts or affiliates on securities are issued solely to major US institutional investors pursuant to SEC Rule 15a-6. Any US person wishing to discuss this report or effect transactions in any security discussed herein should do so with or through SG Americas Securities, LLC to conform with the requirements of US securities law. SG Americas Securities LLC has its registered office at 1221 Avenue of the Americas, New York, NY, 10020. (212) 278-6000. Notice to Canadian Investors: This publication is for information purposes only and is intended for use by Permitted Clients, as defined under National Instrument 31-103, Accredited Investors, as defined under National Instrument 45106, Accredited Counterparties as defined under the Derivatives Act (Qubec) and "Qualified Parties" as defined under the ASC, BCSC, SFSC and NBSC Orders. Notice to Singapore Investors: This publication is provided in Singapore by or through Socit Gnrale ("SG"), Singapore Branch and is provided only to accredited investors, expert investors and institutional investors, as defined in Section 4A of the Securities and Futures Act, Cap. 289. Recipients of this publication are to contact Socit Gnrale, Singapore Branch in respect of any matters arising from, or in connection with, the publication. If you are an accredited investor or expert investor, please be informed that in SG's dealings with you, SG is relying on the following exemptions to the Financial Advisers Act, Cap. 110 (FAA): (1) the exemption in Regulation 33 of the Financial Advisers Regulations (FAR), which exempts SG from complying with Section 25 of the FAA on disclosure of product information to clients; (2) the exemption set out in Regulation 34 of the FAR, which exempts SG from complying with Section 27 of the FAA on recommendations; and (3) the exemption set out in Regulation 35 of the FAR, which exempts SG from complying with Section 36 of the FAA on disclosure of certain interests in securities. Notice to Hong Kong Investors: This report is distributed in Hong Kong by Socit Gnrale, Hong Kong Branch which is licensed by the Securities and Futures Commission of Hong Kong under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ("SFO"). This publication does not constitute a solicitation or an offer of securities or an invitation to the public within the meaning of the SFO. This report is to be circulated only to "professional investors" as defined in the SFO. Notice to Japanese Investors: This publication is distributed in Japan by Societe Generale Securities (North Pacific) Ltd., Tokyo Branch, which is regulated by the Financial Services Agency of Japan. This publication is intended only for the Specified Investors, as defined by the Financial Instruments and Exchange Law in Japan and only for those people to whom it is sent directly by Societe Generale Securities (North Pacific) Ltd., Tokyo Branch, and under no circumstances should it be forwarded to any third party. The products mentioned in this report may not be eligible for sale in Japan and they may not be suitable for all types of investors. Notice to Australian Investors: This publication is issued in Australia by Socit Gnrale (ABN 71 092 516 286) ("SG"). SG is regulated by APRA and ASIC and holds an AFSL no. 236651 issued under the Corporations Act 2001 (Cth) ("Act"). The information contained in this publication is only directed to recipients who are wholesale clients as defined under the Act. http://www.sgcib.com. Copyright: The Socit Gnrale Group 2013. All rights reserved. This publication may not be reproduced or redistributed in whole in part without the prior consent of SG or its affiliates. .

45