EMD: Beyond the cover story · EMD: Beyond the cover story This presentation is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients

Nishant Upadhyay, Head of Emerging Market Debt

16 September 2016

EMD: Beyond the cover story

This presentation is intended for Professional Clients only and should not be distributed

to or relied upon by Retail Clients. The information contained in this publication is not

intended as investment advice or recommendation. Non contractual document

2

Summary

EMD: Investment team

What is our outlook for EMD?

EMD: HSBC’s product offering

EMD Total Return Strategy

Appendix (Asia)

Important Information

EMD: Investment team

4

Meet the EMD investment team

Nishant UpadhyayHead of the Global EMD team

Olga Yangol, CFA, FRM,

CAIAPortfolio manager

Local Markets

Bill LangPortfolio manager

Local Debt and Currency Strategies

Vinayak Potti, CFA Portfolio manager

Total Return strategies

Binqi LiuPortfolio manager

Local Markets

Jaymeson Kumm, CFAPortfolio manager

Hard Currency

Non contractual document

5

EMD: Full platform

1. Christina Ronac reports functionally to Rick Deutsch, Global Head of Credit Research and locally to Nishant Upadhyay, Head of Global Emerging Markets Debt.

2. Covers both developed and emerging market companies

3. Employees of HSBC Jintrust

4. Not an exhaustive list of members

5. Macro investment strategists

Source: HSBC Global Asset Management, as of September 07, 2016.

EMD Credit Research Analysts

London

Cagdas Hatinoglu2

Mumbai

Anitha Rangan

Aswin Kumar

Mexico City

Juan Pablo Arizaleta

Pablo San Jose

Buenos Aires

Maria Jose Luisi

Hernan Torre

New York

Christina Ronac1

Tatiana Brikulskaya

Dusseldorf

Frank Joachim2

Hong Kong

Elizabeth Allen

Wilson Yip

Seok Poh Yeoh

Jaywon Jung

Alex Choi

Tony Xiao

Kingston Lam

Shanghai3

Rollin Cai

William Fan

Wang Zhaoyi

Product Management

Brian Dunnett

Head of Product Specialists

Amanda LaMarca

Senior Product Specialist

Global EMD Portfolio Management Team

Nishant Upadhyay

Head of Global Emerging Markets Debt

Portfolio Engineering

Hugo Novaro

Head of Portfolio Engineering

Trading, Risk Management

Adolfo Cheong

Risk Management

Michael Cropano

Trading

Christian Daniello

Trading

Scott Davis

Trading

Portfolio Management

Billy Lang

Portfolio Manager / Local Markets

Binqi Liu


Jaymeson Kumm

Portfolio Manager / External

Corporates

Vinayak Potti

Portfolio Manager / Total Return

Olga Yangol


Credit Research

Christina Ronac1

Head of EMD Credit Research

Tatiana Brikulskaya

Credit Research Analyst

Global Investment Strategy5

(Coverage)

10+ Professionals

David Semmens (Global & US)

Marcus Sonntag (Global & Europe)

Rabia Bhopal (Global & Frontier)

Sam Pham (Global)

Hussain Mehdi (Global)

Renee Chen (Asia)

Herve Lievore (Asia)

Local Fixed Income

Investment Teams (# staff)4

Asia Pacific (29)

EMEA (69)

Latin America (7)

North America (26)


What is our outlook for EMD?

7Non contractual document

EMD: After 2 cautious years, we are more constructive Why?

• The UK’s vote to

leave the EU is a

near-term negative

for risk assets,

including EM

• We will likely

continue to see

volatility in the

near-term

• Deceleration in

China is a setback

for EMs…yet, we

believe China

should be able to

“muddle through”

in the next few

years

• We believe that the

normalization of US

monetary policy

should have a

manageable effect

on EM countries

• After a deceleration

in global trade over

the past few years,

there has been

stabilization and a

small uptick

Source: HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.

8

EMD: Capital flows have picked up


Stabilization in EM fundamentals, a more benign external environment, and attractive relative

valuations, have led to a pick-up in foreign direct investment and portfolio inflows into EMD

If US monetary policy continues to be well communicated and, in the absence of a sudden

shock, the asset class should remain supported

We believe Foreign Direct Investment (FDI) by is far more stable and supports the medium- to

long-term prospects of EM economies

EM Direct Investment EM Portfolio Flows


9

EMD: Attractive relative valuations

EM Hard Currency spreads and

Local Rates levels are not cheap

on an absolute basis or on a

historical basis

However, in a world of negative

or near zero interest rates in

DMs, EMD valuations look

attractive on a relative basis

Fluctuations in EM rates will

likely be higher than in DMs,

nevertheless, we believe that

long-term investors are well

compensated for this volatility

Source: Bloomberg, HSBC Global Asset Management. as of September 9, 2016 . Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without

notice.

EM Local Yield

G3 Blended Rate

Difference

EM vs DM historical yields


10

EMD: Attractive relative valuations

Investment Grade (IG) EM sovereigns are trading at a historical credit premium vs. US and

Euro equivalents

EM high yield (HY) still offers a relative premium to US and Euro HY; yet the differential has

declined over the past year as US HY spreads have widened

In our EMD portfolios, we focus on higher quality countries with large reserves, floating

exchange rates and responsible fiscal and monetary policies

In HY countries, we add exposure if valuations justify the investment case

Source: HSBC Global Asset Management, JP Morgan, Merrill Lynch, as of August 2016. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change

without notice.

EM IG is

trading at a

historical

credit

premium

EM HY still at

a premium yet

significant

decline

Investment Grade (IG) Credit High Yield (HY) Credit


11

EMD: Valuations are fair to richFX and Hard Currency IG are most attractive

REER valuations still below 5-year average howeverLocal yields look rich relative to history

IG spreads look more attractive

90

95

100

105

110

115

01/1

1

04/1

1

07/1

1

10/1

1

01/1

2

04/1

2

07/1

2

10/1

2

01/1

3

04/1

3

07/1

3

10/1

3

01/1

4

04/1

4

07/1

4

10/1

4

01/1

5

04/1

5

07/1

5

10/1

5

01/1

6

04/1

6

07/1

6

RE

ER

index

EM Real Effective Exchange Rate 5-year average REER

▬ JPM GBI-EM GD

▬ 3 Year rolling average

▬ 2 standard deviations (+)

▬ 2 standard deviations (-)

▬ JPM EMBIG HY



▬ 2 standard deviations (-)

▬ JPM EMBIG IG



▬ 2 standard deviations (-)P

erc

en

t (%

)S

pre

ad

s (

Bp

s)

Sp

rea

ds (

Bp

s)

Source: HSBC Global Asset Management, JP Morgan, Bloomberg, as of August 2016. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without

notice.


HY spreads are tight relative to history

12

0,0

0,5

1,0

1,5

2,0

2,5

janv. 07 nov. 07 sept. 08 juil. 09 mai 10 mars 11 janv. 12 nov. 12 sept. 13 juil. 14 mai 15 mars 16

30-w

eek

Vo

lati

lity

Rat

io

EM vs US HY Volatility Ratio EM vs US IG

0,0

0,4

0,8

1,2

1,6

2,0

2,4

2,8

août 11 févr. 12 août 12 févr. 13 août 13 févr. 14 août 14 févr. 15 août 15 févr. 16

30-w

eek

Tra

ilin

g S

t D

ev

LatAm HY EMEA HY Asia HY

0,0

0,4

0,8

1,2

1,6

2,0

août 11 févr. 12 août 12 févr. 13 août 13 févr. 14 août 14 févr. 15 août 15 févr. 16

30-w

eek

Tra

ilin

g S

t D

ev

LatAm IG EMEA IG Asia IG

EMD: Volatility is near all-time lows

Latam

Volatility

still priced

into spreads

Volatility at

low levels

against US

(particularly

for EM HY)

Source: HSBC Global Asset Management, JP Morgan, Bloomberg, as of August 2016. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without

notice.


13

Signs of “overshoot” in market valuations & “green shoots” in fundamentals

1 Equally weighted across 8 commodity exporting countries (Brazil, Chile, Colombia, Peru, Russia, South Africa, Indonesia, and Mexico)

For illustrative purposes only. Past performance is no guarantee of future results.

Source: Bloomberg, data as of July 31, 2016Source: Bloomberg, data as of August 31, 2016

Current Account/GDP1Terms of Trade & Real Effective Exchange Rates1

Terms of trade for EM commodity exporters have fallen since 2011 to current levels

(comparable to early 2000’s) and real effective exchange rates have fallen even more

Commodity exporters have started to show signs of adjustment in current account



14

EM country fundamentals stabilizing

Source: EIU, August 2016, EM Countries: Brazil, Chile, China, Colombia, Hungary, Indonesia, Kazakhstan, Malaysia, Mexico, Peru, Philippines, Russia, South Africa, Turkey

Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.

Stabilizing fiscal dynamics Improving current accounts

EM Debt levels have creeped up, but projected to stabilize

Inflation stabilizing and projected to decline on FX strength and base effect

EM fiscal deficit EM current accounts

EM public debt EM inflation


15

Above and beyond -- The “Grand Normalization”

Source: Bloomberg, HSBC Global Asset Management, January 2016

LHS: Current Account in 1000 USD LHS: Current Account in 1000 USD

The “Super Cycle” inflated by the US and Eurozone running huge current account deficits is

officially over

Global trade and Commodity prices are “back to normal”

Without external demand support, EM asset performance will be more heterogeneous

US+Eurozone current account and Baltic Dry Index

US+Eurozone current account and Commodity Index

Past performance is no guarantee of future results. The views expressed were held at the time of

preparation and are subject to change without notice. Non contractual document

16

Country

Private

consumption

(% of GDP)

Government

consumption

(% of GDP)

Gross fixed

investment

(% of GDP)

Gross fixed

investment/

Gross

National

Savings

Budget

balance

(% of GDP)

Public debt

(% of GDP) Export/GDP

Nigeria 78.7 8.5 15.4 1.19 -2.5 14.5 0.09

Philippines 73.2 10.8 21.6 0.87 -1.9 44.5 0.18

Turkey 70 15.6 19.2 1.05 -1.7 32.6 0.19

Mexico 69.7 12.3 22.6 1.13 -3 49.7 0.36

Romania 68 6.8 25.1 1.03 -3 39.4 0.34

Paraguay 67.2 12.7 15.5 1.22 -1.7 22.9 0.27

Vietnam 65.7 6.2 25 0.86 -3.7 52 0.84

Chile 65.2 13.9 22 1.18 -3 18.7 0.25

Colombia 63.7 18.8 26.5 1.27 -2.6 47.5 0.13

Peru 63.1 13.4 24.2 1.15 -2 25.5 0.19

Brazil 63 20.8 15.5 1.18 -8.4 76 0.12

Bulgaria 60.9 16 21 0.94 -2 29 0.56

South Africa 60.7 20.7 22 1.25 -3.5 46.8 0.32

India 60.2 10.9 30.2 0.97 -3.8 51.6 0.12

Morocco 59.4 18.9 28.9 0.99 -4.2 73.4 0.21

Croatia 59.1 19.4 19.2 0.91 -4.4 91.7 0.27

Poland 58.2 18.2 20 1.01 -2.9 47.7 0.44

Indonesia 56.4 9.6 33.3 1.04 -1.8 28.6 0.16

Malaysia 54.7 12.9 25.8 0.90 -3.4 54 0.67

Russia 53.4 21 19.8 0.99 -3.8 13.9 0.28

Kazakhstan 52.2 13.3 23.7 1.04 -2.6 16.3 0.30

Taiwan 51.8 13.8 20.1 0.59 -0.9 31.4 0.48

Thailand 51 17.2 23.4 0.84 -2.5 49.7 0.52

Hungary 50.2 19.2 20.9 0.86 -2.3 75.1 0.86

South Korea 48.7 15.3 29.3 0.80 -0.6 35.2 0.36

Czech Republic 47.9 19 25.4 0.97 -1.3 40.9 0.86

China 39.7 14.3 40.6 0.91 -3.5 23.4 0.21

Singapore 37 10.4 24.8 0.50 0.5 105.8 1.11

How do EM countries grow with lower external demand?

Source: HSBC Global Asset Management, as of 18 January 2016


17

How much value remains in commodity spreads?

Sector (IG) Current 4YR Avg. 4YR Tight 4YR Wide Retrace (%)

Materials 81 109 81 152 0%

Real Estate 42 60 43 77 0%

Energy 133 147 113 201 23%

Utilities 45 46 36 59 38%

Telecommunications 83 82 63 105 48%

Food 46 68 40 134 6%

Transportation 36 39 29 79 15%

Capital Goods 49 46 35 61 55%

Spread/turn of Leverage

Sector (HY) Current 4YR Avg. 4YR Tight 4YR Wide Retrace (%)

Real Estate 48 102 48 147 0%

Materials 139 175 138 249 1%

Energy 190 195 125 343 30%

Food 141 151 109 235 26%

Transportation 280 236 136 431 49%

Utilities 106 116 91 157 23%

Retail 520 279 174 528 98%

Telecommunications 193 189 76 552 25%

Spread/turn of Leverage

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

8yr Avg Cembi Div Ex Commodities - Cembi Div

January 2016 – spread

widening on commodity

related issuers had the

greatest impact since the

Global Financial Crisis

(GFC). This impact has now

started to normalize…



18

Emerging market Sovereign/Quasi valuationsInvestment Grade (IG) Spreads look tight

Source: HSBC Global Asset Management, JP Morgan as of August 31, 2016



19

Emerging market Sovereign/Quasi valuationsHigh Yield (HY) Spreads look tight

Source: HSBC Global Asset Management, JP Morgan as of August 31, 2016



20

Emerging market Sovereign/Quasi valuationDispersion in spread changes creates relative value opportunities

Source: HSBC Global Asset Management, JP Morgan , as of September 8, 2016.

*Tight Eastern Europe includes Hungary, Poland, Lithuania, Romania, Latvia and Slovakia and Latam includes Mexico, Peru, Chile, Panama, Uruguay and Paraguay,

Tight spread Asia includes Philippines, India, China and Malaysia and

Grouping RatingCurrent Spd

(bps)

Duration

(yrs)

Embi Div

Wt (%)

Tight Spread Asia A- 196 7.0 12.0

Tighten Eastern Europe A- 181 5.0 10.47

Low Beta Latam BBB+ 331 9.0 17.3

Mid Beta Spread BBB- 425 7.0 18.1

CEEMEA Spread BB 406 5.0 16.09

Caribbean Spreads B+ 599 7.2 5.7

Frontier Spreads B 788 5.0 9.5

B/C B/C 1423 5.0 7.8

*

*

*

100

120

140

160

180

200

220

240

260

280

26-janv.-11 26-janv.-12 26-janv.-13 26-janv.-14 26-janv.-15 26-janv.-16

Tight Asia Spread 3yr Avg

100

150

200

250

300

350

400

450

500


Tight Eastern Europe 3yr Avg

115

165

215

265

315

365

Latam 3yr Avg

Past performance is no guarantee of future results. The views expressed were held at the time of

preparation and are subject to change without notice. Non contractual document

21

Emerging market Sovereign/Quasi valuationDispersion in spread changes creates relative value opportunities

Source: HSBC Global Asset Management, JP Morgan , as of September 8 2016.

Mid Beta Spd includes Turkey, Indonesia, Brazil, Colombia and South Africa, CEEMEA includes Russia, Lebanon, Croatia, Serbia, Azerbaijan, Kazakhstan, Georgia, Armenia and Belarus, Frontier includes Cameroon, Mozambique,

Tanzania, Jordan, Belize, Ethiopia, Tunisia, Iraq, Gabon, Trinidad and Tobago, Guatemala, Nigeria, Bolivia, Honduras, Senegal, Egypt, Kenya, Mongolia, Angola, Zambia, Ghana, Vietnam, Cote D‘Ivoire and Pakistan and B/C includes

Ukraine, Argentina, Venezuela and Ecuador.

* *

**

125

175

225

275

325

375

425

Mid Beta Spread 3yr Avg

225

275

325

375

425

475

CEEMEA 3yr Avg

300

400

500

600

700

800


Frontier 3yr Avg

650

850

1050

1250

1450

1650

1850

2050

B/C 3yr Avg

Past performance is no guarantee of future results. The views expressed were held at the time of preparation

and are subject to change without notice.


22

Trends in Net Issuance

-40 000

-20 000

0

20 000

40 000

60 000

80 000

100 000

ASIA Corp EMEA Corp LATAM Corp

-30 000

-20 000

-10 000

0

10 000

20 000

30 000

40 000

ASIA Sov EMEA Sov LATAM Sov

Corporate net supply is still recovering while sovereign supply continues to be strong

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21EMEA Sov EMEA Corp Latam Sov Latam Corp Asia Sov Asia Corp

Corporate net supply is

still recovering while

sovereign supply

continues to be strong



23

Selective opportunities exist in EM local rates

Source: Bloomberg, HSBC Global Asset Management. as of August 31, 2016 . Past performance is no guarantee of future results. USD/ELMI theoretical is composed of HSBC Global Asset Management calculations based on

inflation-adjusted productivity differentials between EM and US productivity indices.

GBI-EM Global Diversified Yield (%)

Divergence in valuations, has provided opportunities in EM local curves

We are defensively positioned to countries correlated to the US and DMs given the pressure

from the rising rate environment

We are cautious on local rate curves in Asia due to expensive valuations

LATAMCentral

Bank Rates

Rates change

priced in 1y InflationGDP

GrowthReal Rate

2y-10y slope

Brazil 14.25 -247 8.84 -5.42 541 -53

Mexico 4.25 9 2.53 2.6 172 110

Colombia 7.5 -52 8.6 2.5 -110 60

Peru 4.25 19 3.34 4.4 91 115

EUROPE

Poland 1.5 16 -0.8 3 230 110

Hungary 0.9 -26 -0.2 0.9 110 173

Russia 10.5 -176 7.5 -1.2 300 -66

Romania 1.75 -39 -0.7 4.3 245 216

Turkey 8.18 87 7.64 4.81 54 50

South Africa 7 103 6.3 -0.2 70 87

ASIA

Thailand 1.5 9 0.38 3.2 112 46

Malaysia 3 -50 1.6 4.2 140 102

Philippines 3 32 1.9 6.9 110 81

Indonesia 6.5 0 3.45 4.92 305 55

US 0.5 35 1.0 2.1 -50 82

Source: Bloomberg, HSBC Global Asset Management. as of July 21, 2016


24

Select currency valuations have improved

Source: Bloomberg, HSBC Global Asset Management. as of August 26, 2016. Past performance is no guarantee of future results. USD/ELMI theoretical is composed of HSBC Global Asset Management calculations based on

inflation-adjusted productivity differentials between EM and US productivity indices.

Emerging Market FX Valuation

Currency valuations have improved after significant depreciation, however deteriorating

fundamentals and challenging external environment points to further weakness in currencies


25

Local currency technical analysis

Source: HSBC Global Asset Management, Bloomberg. Data as of August 2016. The data presented is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial

instrument or investment strategy. Past performance is no guarantee of future results. USD positions expressed as the sum of the number of contracts of MXN, CAD, AUD, EUR, and GBP that speculative accounts were

long/short vs USD at the Chicago Mercantile Exchange (CME).

Speculative Currency Positioning

Mexican Peso Positioning


26

High yielders vs Asian currencies

Source: Bloomberg, HSBC Global Asset Management Currency spot return since 2011 versus implied yields as of September 2016. Past performance is no guarantee of future results.

Currency spot returns since 2011 versus implied yields

Select EM HY currencies offer value given attractive yields and valuations

Asian currencies: further room to adjust and offer low, or in some cases, negative yields


27

“Fallen” angels offer valueColombia – Attractive carry and valuations

Terms of Trade Current Account

1Y Government YieldREER


Source: Bloomberg, HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.

28

“Fallen” angels offer valueRussia – Improving terms of trade

Terms of Trade Current Account

1Y Government YieldREER


Source: Bloomberg, HSBC Global Asset Management. Past performance is no guarantee of future results. The views expressed were held at the time of preparation and are subject to change without notice.

29

China : lower growth or lower debt?

Debt

The debt problem is still growing

with no significant reforms done to

tackle the cause

– What is the real size of the debt problem?

– What are the sources of the problem?

– Where will stress be coming from?

Growth

“Two-speed economy” +

“Two-speed housing market” +

“Two-speed investment”

– H1 growth was supported by infrastructure

building, money pumped by fiscal policy

– Private investment has dropped to record

low at 2%, business sentiment at the low

– July China loan figure revealed a staggering

fact: 100% of newly increased loans are

mortgages



30

Outlook summary and strategy

Dispersion in

emerging

markets will

continue

creating both

reasons to be

cautious, but

opportunities

do exist

Medium and

long term

return

projections for

the asset class

are decent, and

should

compensate

short-term

volatility along

the way

Factors such

as China,

commodities

and the FED

may have

already been

priced into

some

segments of

the EM market

Seek to be

compensated

for interest,

credit, liquidity

and volatility

risk

Keep a buffer

of cash in the

portfolios to

manage flows

and to allocate

to new

opportunities

as they arise



EMD: HSBC’s product offering

32

HSBC Global Asset ManagementHistorical picture of assets under management (AUM)

1. Prior to 2010, assets managed in Hong Kong and Singapore were not classified as Emerging markets.

Source: HSBC Global Asset Management. Data as of 30 June 2016. Differences due to rounding. The data is supplemental to the GIPS compliant report at the end of this material

Emerging Markets Assets Growth1

We are of the world’s largest EMD managers with more than USD406.1 billion in AUM

– Total EM assets have grown from USD46 billion (2005) to USD 114.5 billion (June 2016)

– EM Fixed Income assets total USD82.4 billion, 71% of total EM assets

– EMD assets managed by team in New York total USD18.4 billion

64

12.1

18.4

20

0

25

50

75

100

125

150

175

2007 2008 2009 2010 2011 2012 2013 2014 2015 2Q16

US

D b

illio

ns

EM Fixed Income (ex-NY EMD) EM Equity EM Other NY EMD Team


33

EMD: Cross border fund rangeHSBC Global Investment Funds, a Luxembourg domiciled SICAV

Source: HSBC Global Asset Management as at 31 August 2016. *Benchmarked strategies are those that have a comparative index.

For illustrative purposes only.

Benchmarked*

Strategies

Flexible Strategy

Duration

< 3 yrs

Duration

> 3 yrs

Hard currency Local currency

HSBC GIF Global Emerging

Markets Local Debt


Markets Local Currency Rates


Markets Bond

HSBC GIF GEM Inflation

Linked Bond


Markets Corporate Debt

HSBC GIF Global Emerging Markets Investment Grade Bond

HSBC GIF GEM Debt Total Return


EMD Total Return Strategy

35

Total Return Strategy: OverviewThe outputs that will likely challenge current business models

• Deliver the average

performance of the EM

external and local debt

indices

• Lower volatility

• Duration: 1-4 years

• Flexibility to invest across the

full emerging market debt

opportunity set with no bias to

a benchmark

• Key focus is to minimize the

potential downside risk

• Portfolio engineering and risk

management are rigorously

integrated in the investment

process

• 5Y annualized investment

return: 4.17%

• 5Y Sharpe ratio: 0.63

• Launch: November 1999

• AUM: USD5.1 billion as of

June 2016

ObjectiveTotal return

approachPerformance


Source: HSBC Global Asset Management, JP Morgan. Data as of 30 June 2016 unless noted otherwise. Performance data is calculated gross of fees and assumes the reinvestment of dividends, income and any capital gains and is net of

transaction costs. The results are shown before the deduction of investment advisory fees and other expenses, which would reduce a return. Information about investment advisory fees is available in our Form ADV Part 2A, which is available

upon request. Returns greater than one year are annualized returns. Past performance is no guarantee of future results. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please see important disclosure at the

end of this presentation concerning the impact of investment advisory fees and expenses on performance, benchmark definitions and calculation methodology for characteristics. Returns and Sharpe ratio are based on the composite information.

Portfolio characteristics, including position sizes and sector allocations, among others, are generally averages, are only for illustrative purposes, and do not reflect the investments of an actual portfolio unless otherwise noted. The investment

guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. Information reflects the representative account of the composite. Each portfolio may differ due to individual

client restrictions and guidelines. Accordingly individual results will vary. Strategy goals are over a 12 month period.

36

EMD Total Return Strategy: Historical sector exposureSupplemental information as of 31 August 2016

Source: HSBC Global Asset Management. Data as of 31 August 2016. Weightings and holdings are subject to change without notice. Please see important disclosure at the end of this presentation concerning calculation

methodology for characteristics. Portfolio characteristics, including position sizes and sector allocations, among others, are generally averages, are only for illustrative purposes, and do not reflect the investments of an actual

portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. Data is supplemental to the GIPS®

compliant presentation at the end of this material. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly individual results will vary. Past performance is no guarantee of future results.

Emerging Markets Debt – Total Return Strategy Net Historical Exposures

Our holistic approach to portfolio construction does not create biases to any particular

emerging market asset class and actively allocates amongst potentially optimal opportunities

75%

64%

63%

51%

74% 8

0% 84%

48%

32% 3

7%

30%

30%

22%

20% 23%

31%

52%

93%

94%

102%

99%

75%

88% 91%

82%

91%

64%

21% 2

6%

26%

20% 23%

23%

22%

24%

35%

43% 47% 49% 54%

38%

37% 40%

67%

79%

80%

72%

68%

68%

65%

52%

52%

60% 6

6%

60%

60%

(2,0)

0,0

2,0

4,0

6,0

8,0

10,0

12,0

(20%)

(0%)

20%

40%

60%

80%

100%

120%

janv.-12 avr.-12 juil.-12 oct.-12 janv.-13 avr.-13 juil.-13 oct.-13 janv.-14 avr.-14 juil.-14 oct.-14 janv.-15 avr.-15 juil.-15 oct.-15 janv.-16 avr.-16 juil.-16

Dura

tion (y

ears

)

Sovereign Quasi Corporate Local Rates Local Fx Equity Net Exposure Duration (rhs)


37

EMD Total Return StrategySupplemental information as at 31 August 2016

Source: HSBC Global Asset Management as 31 August 2016 . Portfolio characteristics, including position sizes and sector allocations, among others, are generally averages, are only for illustrative purposes, and do not reflect

the investments of an actual portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. Information

reflects the representative account of the Emerging Markets Debt – Total Return composite. This is for information only and does not constitute investment advice, a solicitation or a recommendation to buy, sell or subscribe to

any investment. It is not intended to provide and should not be relied upon for accounting, legal or tax advice. Representative overview of the investment process, which may differ by product, client mandate or market

conditions. Each portfolio may differ due to individual client restrictions and guidelines. Past performance is no guarantee of future results. Data is supplemental to the GIPS® compliant presentation at the end of this material.


External

Country

Duration Weighted

Exposure

Spread

Duration

% Market

Value

Barbados 0.00 0.00 0.10

Brazil 0.35 0.12 2.75

Chile 0.02 0.02 0.77

China 0.05 0.08 4.08

Colombia 0.24 0.27 7.68

Croatia 0.01 0.01 1.39

Dominican Republic 0.01 0.01 0.15

Europe 0.00

Hungary 0.01 0.01 0.45

India 0.00

Indonesia 0.11 0.11 2.94

Israel 0.00 0.00 0.45

Kazakhstan 0.00 0.00 0.01

Korea, Republic Of 0.00 -0.09 -4.41

Malaysia 0.01 0.01 0.18

Mexico 0.42 0.39 4.70

Panama 0.04 0.04 0.96

Peru 0.00 0.02 1.34

Philippines 0.00 0.00 0.05

Poland 0.00

Qatar 0.00 -0.01 -1.30

Russian Federation 0.01 0.02 1.33

Serbia 0.03 0.03 1.98

South Africa 0.11 0.19 6.02

Turkey 0.06 0.09 6.28

United Arab Emirates 0.00 -0.01 -0.38

United States -0.06 0.00 6.55

Venezuela 0.00 0.00 0.06

TOTAL 1.40 1.33 44.13

Local

Currency

Duration Weighted

Exposure

% Currency

Exposure

% Market

Value

BRL 0.01 0.04 5.89

CLP 0.00 -2.80

CNY 0.00 0.00

COP 0.00 7.37

EUR 0.00 -4.91

HUF 0.00 -0.03

INR 0.00 3.70

IDR 0.00 3.84

ILS 0.00 -0.03

KRW 0.00 -2.58

MYR 0.00 0.03

MXN 0.19 5.98 6.86

PLN 0.00 -2.89

RUB 0.00 7.81

ZAR 0.09 -0.04 1.56

TRY 0.07 0.03 1.24

AED 0.00 0.00

USD 0.00 84.47

TOTAL 0.36 100.00 15.55

38

Emerging Markets Debt – Total ReturnSupplemental information as of 30 June 2016

Source: eVestment, HSBC Global Asset Management. Past performance is no guarantee of future results. Performance of the composite results and data represent absolute value of the composite. Performance data is calculated gross of fees

and assumes the reinvestment of dividends, income and any capital gains and is net of transaction costs. The results are shown before the deduction of investment advisory fees and other expenses, which would reduce a return. Information

about investment advisory fees is available in our Form ADV Part 2A, which is available upon request. Returns greater than one year are annualized. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please

see important disclosure at the end of this presentation concerning the impact of investment advisory fees and expenses on performance and benchmark definitions. Portfolio characteristics, including position sizes and sector allocations, among

others, are generally averages, are only for illustrative purposes, and do not reflect the investments of an actual portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially

different in size, nature and risk from those shown. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly individual results will vary.

5 Years As Of: 30 June 2016

HSBC Global Asset Management:

Emerging Markets Debt – Total Return


39

Emerging Markets Debt – Total Return attributionSupplemental information as of 31 August 2016

Attribution (bps) 2010 2011 2012 2013 2014 2015 YTD 2016

Sovereign/Quasi-Sovereign

Investment Grade 118 149 354 (58) 255 (29) 232

BB-Rated 134 20 158 (2) 12 19 194

B-Rated 174 97 127 5 14 0 1

< B-Rated 0 0 0 0 44 0 0

Local Exposure 267 (52) 235 33 328 (32) 278

Corporate Exposure 219 (44) 357 (7) 36 (7) 33

Special Situations and Equities 9 (92) 47 0 0 0 0

IRS Hedge 50 (89) (75) 76 (9) (9) (66)

Others 78 (8) 6 (115) 69 (7) 5

Total 10.49% (0.19%) 12.09% (0.68%) 7.49% (0.65%) 6.77%

Source: HSBC Global Asset Management. Data as of 31 December 2010, 30 December 2011, 31 December 2012, 31 December 2013, 31 December 2014, 31 December 2015 and 31 July 2016. Performance data is calculated gross of fees and

assumes the reinvestment of dividends, income and any capital gains and is net of transaction costs. The results are shown before the deduction of investment advisory fees and other expenses, which would reduce a return. Information about

investment advisory fees is available in our Form ADV Part 2A, which is available upon request. Returns greater than one year are annualized returns. Past performance is no guarantee of future results. Attribution is based on the absolute

performance of the composite. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please see important disclosure at the end of this presentation concerning the impact of investment advisory fees and expenses

on performance. Portfolio characteristics, including position sizes and sector allocations, among others, are generally averages, are only for illustrative purposes, and do not reflect the investments of an actual portfolio unless otherwise noted. The

investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly individual

results will vary. The blended benchmark consists of a 50/25/25 blend of the JPM EMBI Global index, JPM GBI-EM Global Div index and JPM ELMI+.

Index Performance 2010 2011 2012 2013 2014 2015 YTD 2016

JPM EMBIG 12.04% 8.46% 18.54% (6.58%) 5.53% 1.23% 14.65%

JPM GBI-EM GD 15.68% (1.75%) 16.76% (8.98%) (5.72%) (14.92%) 9.68%

JPM ELMI+ 5.68% (5.19%) 7.45% (2.04%) (7.03%) (7.61%) 6.44%

Blended 11.37% 2.40% 15.31% (6.03%) (0.55%) (5.20%) 11.36%


40

Risk adjusted return characteristicsSupplemental information as of 30 June 2016

1. Blended market is 50% JPM EMBIG (external debt)/25% JPM GBI-EM GD (local debt)/25% JPM ELMI+ (local currency).

Source: HSBC Global Asset Management, JP Morgan and Morningstar. Data as of 30 June 2016. Inception Date: 31 October 1999. Benchmark data is for illustrative purposes only and does not represent any actual benchmark for the EMD Total

Return strategy. Performance data is calculated gross of fees and assumes the reinvestment of dividends, income and any capital gains and is net of transaction costs. The results are shown before the deduction of investment advisory fees and

other expenses, which would reduce a return. Information about investment advisory fees is available in our Form ADV Part 2A, which is available upon request. Returns greater than one year are annualized returns. Past performance is no

guarantee of future results. Annualized Returns, Standard Deviation, Correlation and Maximum Drawdown are based on composite data. Duration is based on the representative account of the composite. Time period for drawdown is 10 years

and 3 years as of June 30, 2016. Correlations from the period July 2006 – June 2016. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please see important disclosure at the end of this presentation

concerning the impact of investment advisory fees and expenses on performance, benchmark definitions and calculation methodology for characteristics. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly

individual results will vary.

JPM EMBIG

(External debt)

JPM GBI-EM GD

(Local bond)

JPM ELMI+

(Local currency)

Blended

Benchmark1

HSBC EMD

Total Return

Annualized Return 10 years / 3 years 7.91 / 6.44 5.72 / (3.57) 2.74/ (3.04) 6.13 / 1.52 7.16 / 4.50

Standard Deviation 10 years / 3 years 8.85 / 6.37 13.18 / 12.14 8.52 / 7.08 9.25 / 7.64 6.03 / 4.20

Duration (Years) Current / Typical range 6.94 4.93 0.30 4.7 1.90 / 1.0 – 4.0

Maximum Drawdown 10 years / 3 years (20.74) / (4.32) (29.32) / (24.32) (20.78) / (17.01) (19.21) / (12.23) (7.89) / (3.69)

Period Maximum Drawdown 10 years

Period Maximum Drawdown 3 years

06/01/08-10/31/08

09/01/14-09/30/15

05/01/13-12/31/15

07/01/14-12/31/15

05/01/11-01/31/16

07/01/14-01/31/16

08/01/08-10/31/08

09/01/14-09/30/15

08/01/11-09/30/11

08/01/15-01/31/16

JPM EMBIG

(External debt)

JPM GBI-EM GD

(Local bond)

JPM ELMI+

(Local currency)

Blended

Benchmark1

HSBC EMD

Total Return

JPM EMBIG (External debt) 1.00 0.83 0.72 0.94 0.68

JPM GBI-EM GD (Local bond) - 1.00 0.93 0.97 0.71

JPM ELMI+ (Local currency) - - 1.00 0.91 0.67

Blended Benchmark1 - - - 1.00 0.74

HSBC EMD Total Return - - - - 1.00


41

Emerging Markets Debt – Total ReturnSupplemental information as of 30 June 2016

Source: HSBC Global Asset Management Data as of 30 June 2016. Performance data is calculated gross of fees and assumes the reinvestment of dividends, income and any capital gains and is net of

transaction costs. The results are shown before the deduction of investment advisory fees and other expenses, which would reduce a return. Information about investment advisory fees is available

in our Form ADV Part 2A, which is available upon request. Past performance is no guarantee of future results. Data is supplemental to the GIPS® compliant presentation at the end of this material. Please see

important disclosure at the end of this presentation concerning the impact of investment advisory fees and expenses on performance, benchmark definitions and calculation methodology for characteristics. Data is for illustrative

purposes and reflects the representative account of the composite. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly individual results will vary.

(1,0)

(0,5)

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

(10,0)

(5,0)

0,0

5,0

10,0

15,0

20,0

juin

-11

aoû

t-1

1

oct.

-11

déc.-

11

févr.

-12

avr.

-12

juin

-12

aoû

t-1

2

oct.

-12

déc.-

12

févr.

-13

avr.

-13

juin

-13

aoû

t-1

3

oct.

-13

déc.-

13

févr.

-14

avr.

-14

juin

-14

aoû

t-1

4

oct.

-14

déc.-

14

févr.

-15

avr.

-15

juin

-15

aoû

t-1

5

oct.

-15

déc.-

15

févr.

-16

avr.

-16

juin

-16

Rolli

ng 1

2-m

onth

Sharp

e R

atio

Rolll

ing

12-m

onth

perf

orm

ance (

%)

Rolling 12-month Performance Rolling 12-month Sharpe Ratio


Appendix

43

New reality of Asia: strong trade balance ≠ strong trade

Source: Bloomberg, HSBC Global Asset Management. as of 30 April 2015. Asian countries and regions in the charts are: Indonesia, Malaysia, Thailand, Taiwan, Philippines, Singapore, China. Past

performance is no guarantee of future results.

Asia ex China trade (yoy%)

Asia ex China trade (mmUSD)

Strong recovery of trade balances hides the

truth of weak exports for Asian exporting

nations

Year-on-year exports and imports have

dropped from double digits to negative

Asia trade (mmUSD)


44

“Invincible” RMB: the ultimate tail risk of Asian currencies

Source: Bloomberg, EIU, HSBC Global Asset Management as of December 2015.

Fixed Exchange RateFree Capital Flow

Independent Monetary Policy

Source: Bloomberg, as of August 31, 2016.

Nominal GDP (USD bn)

3 730

21 440

10 955

12 015

17 947

0

5 000

10 000

15 000

20 000

25 000

Ch

ina

Inte

rnat

ion

al R

eser

ves

Ch

ina

M2

Sto

ck

Ch

ina

No

min

al G

DP

US

M2

Sto

ck

US

No

min

al G

DP

3 330

838

1 253

0

500

1 000

1 500

2 000

2 500

3 000

3 500

Chin

a Inte

rnatio

nal R

eserv

es

2015 C

apital O

utflo

w

BIS

Fo

reig

n C

laim

s o

n C

hin

a

REER


45

China’s Balance of payment – large capital outflows likely to be short term, however…

Source: EIU, HSBC Global Asset Management. as of Apr 2016

2 946 070

500 732

-1 494 434

1 329 490

-2 000 000

-1 500 000

-1 000 000

-500 000

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

3 500 000

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Accumulated Current Account

Accumulated Inward Portfolio investment and intl bond issues

Accumulated Other capital flows

Stock of inward foreign direct investment

-400 000,00

-300 000,00

-200 000,00

-100 000,00

0,00

100 000,00

200 000,00

300 000,00

400 000,00

500 000,00

600 000,00

700 000,00

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Current transfers: balance

Income: balance

Services: balance

Trade balance

Current-account balance

-200 000,00

-100 000,00

0,00

100 000,00

200 000,00

300 000,00

400 000,00

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Outward direct investment

Inward direct investment

Net direct investment flows

-1 000 000,00

-800 000,00

-600 000,00

-400 000,00

-200 000,00

0,00

200 000,00

400 000,00

600 000,00

800 000,00

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Current-account balance

Other capital flows (net)

Net portfolio investment flows

Net direct investment flows

Balance of Payment

Services deficit will negatively impact the current account

Majority of reserves accumulated through current account surplus

Risks to the outlook for balance of paymentsOutward FDI has increased dramatically



47


Gross performance information. Performance data is calculated gross of fees and assumes the reinvestment of dividends, income and any capital gains and is net of transaction costs. The results are shown

before the deduction of investment advisory fees and other expenses, which would reduce a return. Information about investment advisory fees is available in our Form ADV Part 2A, which is available upon

request. The following hypothetical illustrates how investment advisory fees, compounded over time, could impact performance. Assuming a portfolio’s annual rate of return is 15% for 5 years and the annual

investment advisory fee is 50 basis points, the gross cumulative five-year return would be 101.1% and the five-year return net of fees would be 96.8%.

Characteristics methodology.

Characteristics are based on the representative account of the composite.

Cash equivalents are defined as any security with a maturity of less than 1 year.

For all strategies except EMD – Total Return, data representing regional, sector and quality distribution characteristics of the strategy have been calculated after removing cash and cash equivalents and

rebalancing the remaining investments to 100%.

Average Quality ratings are based on HSBC methodology and may differ from published sources. The average quality is calculated utilizing a weighted average of each fund's holdings in accordance with

HSBC’s internal methodology, which includes taking the highest rating of S&P, Moody’s or Fitch where available. If a security is unrated, it will be assigned a rating in accordance with HSBC’s internal

methodology. Unrated categories reflect Cash and cash equivalents.

Country distribution data reflects the total exposure to a country which includes local currency exposure.

Duration calculations include cash and cash equivalents.

Attribution and Contribution to Returns for the components are based on the aggregate relative performance of the underlying holdings, which includes both contributors and detractors.

Risk Considerations. There is no assurance that a portfolio will achieve its investment objective. In addition, there is no guarantee that any investment strategy will work under all market conditions, and each

investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Portfolios are subject to market risk, which is the possibility that the market values of securities

owned by the portfolio will decline. Accordingly, you can lose money investing in any of these strategies. Please be aware that these strategies may be subject to certain additional risks, which should be considered

carefully along with the strategy’s investment objectives and fees before investing. Foreign and emerging markets. Investments in foreign markets entail special risks such as currency, political, economic, and

market risks. The risks of investing in emerging-market countries are greater than the risks generally associated with foreign investments. Fixed income securities. Subject to credit and interest-rate risk. Credit

risk refers to the ability of an issuer to make timely payments of interest and principal. Interest-rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of

interest rates. In a declining interest-rate environment, the portfolio may generate less income. In a rising interest-rate environment, bond prices fall. Credit Quality. Investments in high-yield securities (commonly

referred to as “junk bonds”) are often considered speculative investments and have significantly higher credit risk than investment-grade securities. The prices of high-yield securities, which may be less liquid than

higher rated securities, may be more vulnerable to adverse market, economic or political conditions. Convertibles. Subject to the risks of equity securities when the underlying stock price is high relative to the

conversion price (because more of the security’s value resides in the conversion feature) and debt instruments when the underlying stock price is low relative to the conversion price (because the conversion

feature is less valuable). A convertible bond is not as sensitive to interest rate changes as a similar non-convertible debt instrument, and generally has less potential for gain or loss than the underlying equity

security. Exchange-Traded Fund Risk. Subject to the underlying securities the ETF is designed to track, although lack of liquidity in an ETF could result in it being more volatile than the underlying portfolio of

securities. Disruptions in the markets for the securities underlying ETFs could result in losses on the Portfolio’s investments. ETFs also have management fees that increase their costs versus owning the

underlying securities directly. Derivative instruments. Derivatives can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on performance. Non-diversification.

Focusing investments in a small number of issuers, industries, foreign currencies or particular countries or regions increases the risks associated with a single economic, political or regulatory occurrence.

eVestment Universe descriptions. eVestment Emerging Markets Fixed Income – Hard Currency: Common benchmarks include JPM EMBI Global Diversified, JPM EMBI Global, JPM EMBI+. The Primary

Fixed Income Style/Sector includes sovereign and quasi-sovereign debt securities traded in developed currencies and issued by emerging market governments. EMD Hard Currency (JPM EMBIG Index). This

universe is based on the eVestment Universe Emerging Markets Fixed Income – Hard Currency, which we filtered to only include those strategies benchmarked against the JPM EMBIG Index. This is provided for

illustrative purposes only and is not an official eVestment Universe.

eVestment Emerging Markets Fixed Income – Local Currency: Common benchmarks include JPM GBI – EM Broad, JPM GBI – EM Broad Diversified, JPM GBI – EM Global, JPM GBI – EM Global Diversified,

JPM GBI – EM, JPM ELMI+. The Primary Fixed Income Style/Sector includes sovereign and quasi-sovereign debt securities traded in local currency and issued by emerging market governments. eVestment

Emerging Markets Fixed Income – Corporate Debt: Common benchmarks include JPM CEMBI, JPM CEMBI Diversified, JPM CEMBI Broad and JPM CEMBI Broad Diversified . The Primary Fixed Income

Style/Sector is USD denominated debt issued by emerging market corporations with an Investment Grade or High Yield credit rating. Emerging Markets Fixed Income – Hard Currency, which we filtered to only

include those strategies benchmarked against the JPM EMBIG Index. This is provided for illustrative purposes only and is not an official eVestment Universe.

48

Index definitions

These indices are presented to provide you with an understanding of their historic long-term performance, and are not presented to illustrate the performance of any security or trading strategy. All indices are

unmanaged. Index returns do not reflect any fees, expenses or sales charges associated with investing. Investors cannot invest directly in an index.

The JP Morgan EMBI-Global (EMBIG) Index includes USD-denominated Brady bonds, Eurobonds, and traded loans issued by sovereign and quasi-sovereign entities, and is a traditional market-capitalization

weighted index. The JP Morgan GBI-EM Diversified Index provides a measure of local currency denominated, fixed rate, government debt issued in emerging markets. Weightings among the countries are more

evenly distributed within the diversified index compared to it’s three main composite indices consisting of the GBI-EM, GBI EM Global, and GBI EM Broad indices. The JP Morgan GBI-EM Global Diversified

Index is a comprehensive global local emerging markets index, and consists of liquid, fixed rate, domestic currency government bonds. The JP Morgan ELMI+ Index is an emerging markets currency (FX)

benchmark; the index contains more countries and also brings in the currency aspect of the market, which is an important component of our strategy. The JPM Corporate Emerging Markets Bond Index (JPM

CEMBI) measures the performance of corporate bonds issued in emerging markets. The CEMBI Broad is a comprehensive version of the CEMBI, and is also available in a Diversified version, in which weightings

are more evenly distributed. The JPM US Liquid Index (JULI) measures the performance of the investment grade dollar denominated corporate bond market. The JULI focuses on the most liquid instruments with

the objective of making the index a fair and true representation of the investable market Performance and statistics are available by individual issuers, for sectors and sub-sectors, and maturity buckets (dating back

to 31-Dec-1999) Liquid, USD investment grade corps; must be a bullet security paying a non-zero coupon semi-annually. Excludes convertibles, refundables, extendables and perpetuals. The JPM Government

Bond Index (JPM GBI) tracks fixed rate issuances from high-income countries spanning the globe. The JPM Global High Yield Index is designed to mirror the investable universe of the US dollar high yield

corporate debt market. The index is comprised of issuers domiciled across the global markets. The international component of the index is comprised of emerging market and developed market domiciled issuers.

The JPM GBI US Country Index is comprised of the total return of USTs with greater than 13 months to maturity. The JPM Global Aggregate Bond Index (JPM GABI) consists of the JPM GABI US, a U.S.

dollar denominated, investment-grade index spanning asset classes from developed to emerging markets, and the JPM GABI extends the U.S. index to also include multi-currency, investment-grade

instruments. The JPM GABI represents nine distinct asset classes: Developed Market Treasuries, Emerging Market Local Treasuries, Emerging Markets External Debt, Emerging Markets Credit, US Credit, Euro

Credit, US Agencies, US MBS, Pfandbriefe – represented by well-established J.P. Morgan indices. The JPM GABI US is constructed from over 3,200 instruments issued from over 50 countries, and collectively

represents USD8.6 trillion in market value. The JPM GABI is constructed from over 5,500 instruments issued from over 60 countries and denominated in over 25 currencies, collectively representing USD20 trillion

in market value.

The Merrill Lynch 3-Month LIBOR Index represents a high-quality base rate for 3-month constant maturity dollar denominated deposits. The BofA Merrill Lynch U.S. High Yield Master II Index tracks the

performance of below investment grade US dollar-denominated corporate bonds publicly issued in the US domestic markets. Source BofA Merrill Lynch, used with permission. BOFA MERRILL LYNCH IS

LICENSING THE BOFA MERRILL LYNCH INDICES "AS IS," MAKES NO WARRANTIES REGARDING SAME, DOES NOT GUARANTEE THE SUITABILITY, QUALITY, ACCURACY, TIMELINESS, AND/OR

COMPLETENESS OF THE BOFA MERRILL LYNCH INDICES OR ANY DATA INCLUDED IN, RELATED TO, OR DERIVED THEREFROM, ASSUMES NO LIABILITY IN CONNECTION WITH THEIR USE, AND

DOES NOT SPONSOR, ENDORSE, OR RECOMMEND HSBC GLOBAL ASSET MANAGEMENT, OR ANY OF ITS PRODUCTS OR SERVICES.

Morgan Stanley Capital International Emerging Markets Index (MSCI) is a leading provider of investment decision support tools to investors globally, including asset managers, banks, hedge funds and pension

funds. Their products and services include indices, portfolio risk and performance analytics, and governance tools. The MSCI Global Equity Indices are the most widely used benchmarks for cross border equity

funds. MSCI calculates over 120,000 equity and REIT indices daily, including the well-known MSCI EAFE (Europe, Australasia, and Far East), MSCI World, MSCI ACWI IMI (All Country World Investable Market

Index) and MSCI Emerging Markets Indices. In addition to benchmarking and performance measurement, MSCI indices are increasingly being integrated into other areas of our clients' investment processes such

as research and asset allocation, and are frequently used as the basis of derivative financial products. The MSCI Emerging Markets Index (MSCI EM)is a free float-adjusted market capitalization index that is

designed to measure equity market performance of emerging markets. The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market

performance of developed markets.

The EURO STOXX 50 (Price) Index is a free-float market capitalization-weighted index of 50 European blue-chip stocks from those countries participating in the EMU. Each component's weight is capped at 10%

of the index's total free float market capitalization. The index was developed with a base value of 1000 as of December 31, 1991.

The S&P 500 Index is widely regarded as a gauge of the U.S. equities market. It includes 500 leading companies in leading industries of the U.S. economy.

The Barclays US High Yield Index covers the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. The Barclays US Investment Grade Index covers the USD-denominated

domestic and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB- or higher) by at least two ratings agencies. The Barclays Emerging Markets Tradable Government

Inflation-Linked Bond (EMTIL) Index is a rules-based index that provides a diversified exposure to a tradable sub-set of local currency inflation-linked debt from Emerging Markets (EM) Sovereign issuers

represented in the broad benchmark Emerging Markets Government Inflation-Linked Bond (EMGILB) Index

49

Firm disclosure

This document is distributed by HSBC Global Asset Management (France) and is only intended for professional investors as defined by MiFID. The information contained herein is subject to change

without notice. All non-authorised reproduction or use of this commentary and analysis will be the responsibility of the user and will be likely to lead to legal proceedings. This document has no

contractual value and is not by any means intended as a solicitation, nor a recommendation for the purchase or sale of any financial instrument in any jurisdiction in which such an offer is not lawful.

The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management on the markets, according to the information available to date. They do not

constitute any kind of commitment from HSBC Global Asset Management (France). Consequently, HSBC Global Asset Management (France) will not be held responsible for any investment or

disinvestment decision taken on the basis of the commentary and/or analysis in this document. All data from HSBC Global Asset Management unless otherwise specified. Any third party information

has been obtained from sources we believe to be reliable, but which we have not independently verified.

Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (France) accepts no liability for any failure to meet such

forecast, projection or target. The performance figures and simulation/backtest results displayed in the document relate to the past and past performance should not be seen as an indication of

future returns. It is important to remember that the value of investments and any income from them can go down as well as up and is not guaranteed. Capital is not guaranteed. Fluctuations in the

rate of exchange of currencies may have a significant impact on sub-fund performance. Investments in emerging markets are by nature higher risk and potentially more volatile than those inherent in

established markets. Investors are reminded that investments in High Yield issues represent a higher risk of default compared to Investment Grade issues. Investments in Credit Default Swaps

(CDS) are less liquid than standard bond issues. Fluctuations in the rate of exchange of currencies may have a significant impact on performance. Investment in Financial Derivative Instruments

(FDI) may result in losses in excess of the amount invested. This is because a small movement in the price of the underlying financial instrument may result in a substantial movement in the price of

the FDI. The strategies can invest in sub investment grade bonds, which may produce a higher level of income than investment grade bonds, but carry increased risk of default on repayment. The

value of the underlying assets are strongly affected by interest rate fluctuations and by changes in the credit ratings of the underlying issuer of the assets. The Total Return strategy does not imply

there is any protection of capital or guarantee of a positive return over time. The sub-fund is subject to market risks at any time. As interest rates rise debt securities will fall in value. The value of

debt securities is inversely proportional to interest rate movements. Issuers of debt securities may fail to meet their regular interest and/or capital repayment obligations. All credit instruments

therefore have potential for default.

HSBC GIF Global Emerging Markets Bond, HSBC GIF GEM Debt Total Return, HSBC GIF GEM Inflation Linked Bond, HSBC GIF Global Emerging Markets Local Debt, HSBC GIF Global Emerging

Markets Local Currency Rates, HSBC GIF Global Emerging Markets Debt Total Return, HSBC GIF Global Emerging Markets Inflation Linked Bond, HSBC GIF Global Emerging Markets Corporate

Debt and HSBC GIF Global Emerging Markets Investment Grade are sub-funds of HSBC Global Investment Funds, a Luxemburg domiciled SICAV. This material is solely for the attention of

institutional, professional, qualified or sophisticated investors and distributors. It is not to be distributed to the general public, private customers or retail investors in any jurisdiction whatsoever nor to

“US Persons”.

Important information for Luxembourg investors: HSBC entities in Luxembourg are regulated and authorised by the Commission de Surveillance du Secteur Financier (CSSF).

Important information for Swiss investors: This document may be distributed in Switzerland only to qualified investors according to Art. 10 para 3, 3bis and 3ter of the Federal Collective Investment

Schemes Act (CISA). The presented fund is authorised for distribution in Switzerland in the meaning of Art. 120 of the Federal Collective Investment Schemes Act. (Potential) investors are kindly

asked to consult the latest issued Key Investor Information Document (KIID), prospectus, articles of incorporation and the (semi-)annual report of the fund which may be obtained free of charge at

the head office of the representative: HSBC Global Asset Management (Switzerland) Ltd., Bederstrasse 49, P.O. Box, CH-8002 Zurich. Paying agent in Switzerland: HSBC Private Bank (Suisse)

SA, Quai des Bergues 9-17, P.O Box 2888, CH-1211 Genève 1.

HSBC Global Asset Management is the brand name for the asset management business of HSBC Group. The above document has been approved for distribution/issue by the following entity:

HSBC Global Asset Management (France)

421 345 489 RCS Nanterre. Portfolio management company authorised by the French regulatory authority AMF (no. GP99026) with capital of 8.050.320 euros. Postal address: 75419 Paris cedex

08, France.

Offices: Immeuble Coeur Défense, 110, esplanade du Général Charles de Gaulle, 92400 Courbevoie - La Défense 4 . (Website: www.assetmanagement.hsbc.com/fr).

HSBC Global Asset Management (Switzerland) Limited

Bederstrasse 49, P.O. Box, CH-8027 Zurich, Switzerland (Website: www.assetmanagement.hsbc.com/ch)

Copyright © 2016. HSBC Global Asset Management (France). All rights reserved.

Non contractual document updated in September 2016 - AMFR_Ext_453_2016.

Documents

EMD: Beyond the cover story · EMD: Beyond the cover story This presentation is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients