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1、 abc Global Research We think the EM consumer will drive global growth for the foreseeable future Secular consumer themes will outperform Financials and consumer discretionary sectors are superior fundamental plays to staples With the emergence of an EM middle class, the EM consumer is rising rapidl
2、y. In “Consumer in 2050: The rise of the EM middle class”, Karen Ward and Frederic Neumann (15 October 2012) suggest that by 2050, EM consumption could make up around 2/3 of global consumption compared with 1/3 today. They make projections for consumer spending by category out until 2050 and the mai
3、n features of this are shown in the table on page 2. The methodology combines projections for income per capita, demographics and changes in spending patterns. This note attempts to take their broad predictions and distil these into country, sector and stock calls for CEEMEA, Asia and LatAm, as well
4、 as some global winners. Perhaps the most important conclusion of the report is that we need to put the consumer at the centre of our thinking about medium-term equity positioning. Given low growth in the developed world, the EM consumer will be driving the bulk of what growth there is to be had in
5、the global economy for a considerable time to come. Yet the intensity of the story varies markedly between countries and so, of course, does market sensitivity to the story. In CEEMEA, the best secular consumer stories in the region are in Turkey, Russia, Egypt, Nigeria and the UAE. South Africa, in
6、 particular, shows a noticeably weaker trend. We believe that the outlook for Asian consumption remains robust, given that growth has tilted towards domestic demand. A lively labour market makes for a decent outlook we think. We identify Asian stocks that will benefit most from Asian consumers tradi
7、ng up In LatAm, Peru stands out for having the worlds third-highest real per-capita income growth by 2050. Brazil is somewhat less compelling. Its demographics are less positive, and its starting point is higher in terms of both income per capita and consumer spend; though, we are still looking at g
8、rowth rates that far exceed those in the developed world. Equity Strategy Global Emerging Markets CEEMEA equity conversations Playing the secular consumer theme in EM 14 November 2012 John Lomax* Strategist HSBC Bank plc +44 20 7992 3712 Ben Laidler Head of Americas Research HSBC Securities (USA) I
9、nc +1 212 525 3460 Herald van der Linde* Strategist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6575 .hk Erwan Rambourg* Analyst The Hongkong and Shanghai Banking Corporation Limited +852 2996 6572 .hk Robert Parkes* Strategist HSBC Bank plc +44 20 7991 6716 Wietse Nijenhuis* S
10、trategist HSBC Bank plc +44 20 7992 3680 View HSBC Global Research at: http:/ *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations Issuer of report: HSBC Bank plc Disclaimer the consumer 2050 report provides a framework for such
11、 an approach. Perhaps the most important conclusion of the report is that we need to put the consumer at the centre of our thinking about medium-term equity positioning. Given low growth in the developed world, the EM consumer will be driving the bulk of what growth there is to be had in the global
12、economy for a considerable time to come. Yet the intensity of the story varies markedly between countries and so, of course, does market sensitivity to the story. So, for example, at a very general level, in our view, Turkey shows a great consumer trajectory, but the stock market also has a plethora
13、 of different ways to play this. By contrast, in Russia, consumer spending should also grow decently, but this is much more difficult to capture from a stock market perspective. Stock market representation is part of the reason why Turkey has performed so much more strongly this year. Equally, in So
14、uth Africa, where we expect the consumption trajectory to be relatively slow by EM standards, stock market representation is rich. Still, in what follows we try to link Karen and Frederics consumer spending projections to country and sector themes in CEEMEA. In addition to focusing on the secular tr
15、ends, we also consider the overlap between this and the cycle, where appropriate. The best part of their story structurally appears to lie in the interface between housing and mortgage demand. In most parts of CEEMEA, mortgage lending is still in its infancy, but the banks should of course be viewed
16、 as a generic play on EM consumer demand. Regarding banks, this story seems to point most clearly towards Turkey, Russia, Egypt and Nigeria, if you add its banks into the equation. The significant Dangote acquisition premium paid by Tiger Brands could be viewed as highlighting the current value offe
17、red by the Nigerian market and in particular its consumer-related plays (Tiger Brands Dangote: Medium-term pain for longer- term gain, Michele Olivier, 23 October 2012). Of course many of these segments have already performed well, with the partial exception of Russia, but there is still valuation h
18、eadroom, in our view. For Russia, supply indigestion has created headwinds. An additional caveat is that household credit is likely to slow (albeit from c40%) next year, whereas in the other countries it is likely to be accelerating. Nevertheless, the longer-term secular story still looks appealing.
19、 Saudi banks should also benefit from secular growth prospects, and cyclical lending growth is clearly supportive too, although earnings momentum less so (Q3 earnings so far have come in 10% below expectations, largely because of credit-quality issues). By contrast, in Poland the structural growth s
20、tory is moderately lacklustre but cyclical conditions are also weak, with soft employment growth in strong contrast to Saudi Arabia weighing on the lending growth outlook. For South African banks, both secular and cyclical prospects also appear rather discouraging. As regards the cycle, the major th
21、reat lies in macro growth prospects in 2013; we forecast GDP growth at 3.1%, but the risk lies to the downside. 4 Equity Strategy Global Emerging Markets 14 November 2012 abc To a considerable extent our real estate preferences overlap with bank exposure. In terms of our coverage, we think Turkey an
22、d Egypt look especially attractive, Saudi Arabia somewhat so and South Africa less attractive. In the longer term, the following charts highlight what scope there is for a positive synergy to develop between the growth in mortgage lending and real estate demand. In general the CEEMEA real estate sec
23、tor has been heavily impacted by regulatory and legal changes and these are discussed in “CEEMEA Real Estate The three Rs: Regulations, Rates and Return” (Patrick Gaffney et al, 22 October 2012). In many cases, associated fears are overstated, such as in Turkey where additional taxes were mooted or
24、Egypt where real estate companies face challenges against their land banks. For the Turkish real estate market, we expect the residential segment to be partly driven by low interest rates. In addition, however, a refreshed urban transformation law (which aims to renew 45-50% of existing housing) and
25、 a new law that allows Russian and GCC buyers to acquire houses in Turkey should help. The hospitality segment should also be dynamic, given already very low vacancy rates. Real private sector credit growth (% y-o-y) 2004 2005 2006 2007 20082009201020112012f 2013f Czech Republic 9.5 18.1 20.7 21.6 1
26、5.77.01.24.10.8 3.2 Egypt -6.6 -1.9 3.9 3.3 -28.7-2.5-2.9-10.7-5.9 -5.4 Hungary 0.4 9.0 22.4 11.6 12.3-11.50.6-4.3-10.1 -1.5 Kuwait 14.6 15.5 24.6 36.3 7.64.1-4.1-0.51.0 3.2 Morocco* 7.1 10.5 17.9 28.3 20.28.95.29.06.5 7.5 Nigeria 26.6 30.8 27.8 97.1 59.426.6-4.915.435.0 37.5 Poland 0.4 9.0 22.4 29.
27、8 36.1-4.08.97.74.7 5.6 Qatar 19.0 50.6 38.3 37.1 31.916.47.211.916.5 15.3 Russia 20.5 17.7 28.2 34.3 -8.68.34.05.99.9 15.3 Saudi Arabia 36.6 38.2 7.9 13.9 18.9-4.8-0.66.712.3 14.5 South Africa 8.1 20.4 24.2 23.7 18.74.65.56.22.0 3.0 Turkey 44.5 45.3 56.0 29.4 35.311.320.635.816.0 19.0 UAE 18.4 32.7
28、 20.7 37.0 36.0-0.4-2.3-0.12.8 6.4 Note: *Claims on the private sector Source: Thomson Reuters Datastream, National statistical offices, National central banks, HSBC estimates and forecasts CEEMEA banks valuations: P/B versus RoE trend (dots=CEEMEA banks) y = 11.07x - 0.29 R 2 = 0.58 0.0 0.5 1.0 1.5
29、 2.0 2.5 3.0 3.5 4.0 5%10%15%20%25%30% RoE 2013e PB 2013e (x) Source: HSBC estimates 5 Equity Strategy Global Emerging Markets 14 November 2012 abc In Egypt, we believe that the housing shortage has only been exacerbated over the past two years as construction has dried up. HSBC estimates that the m
30、arket needs between 400,000 to 500,000 units every year (based on the number of marriages) and that on average over the past 10 years fewer than 250,000 units have been built. The past two years have been even worse. In the Gulf, Saudi Arabia also has a strong demographic profile, and the government
31、 stimulus should help real estate companies in the medium term, as more Saudis receive government loans. CEEMEA banks valuations: PB versus RoE trend along the cross-section BankCountryRoE 2013ePB 2013e (x) Expensive in relation to trend Capitec Bank HldgsSouth Africa28%3.81 Masraf Al-RayanQatar13%1
32、.90 Alinma BankSaudi Arabia7%1.08 PekaoPoland13%1.70 Burgan BankKuwait15%1.88 FirstRandSouth Africa20%2.41 NSGBEgypt18%2.21 Kuwait Finance HouseKuwait12%1.50 KomercniCzech Republic15%1.80 National Bank of KuwaitKuwait15%1.76 Alrajhi BankSaudi Arabia28%3.16 PKO BPPoland16%1.70 NedbankSouth Africa16%1
33、.67 Standard BankSouth Africa15%1.55 AkbankTurkey15%1.44 Riyad BankSaudi Arabia12%1.08 Commercial Bank Of QatarQatar13%1.18 At-par with the trend Garanti BankasiTurkey16%1.51 National Bank of Abu DhabiUAE14%1.31 Cheap in relation to trend ABSASouth Africa16%1.45 Qatar Islamic BankQatar16%1.41 Qatar
34、National BankQatar19%1.74 Arab National BankSaudi Arabia14%1.18 Doha Bank LtdQatar16%1.42 OTPHungary11%0.76 Bank AsyaTurkey10%0.70 IS BankasiTurkey15%1.15 Banque Saudi FransiSaudi Arabia15%1.14 Abu Dhabi Comm BankUAE13%0.88 CIBEgypt26%2.30 Credit Agricole Egypt BankEgypt20%1.67 VakifbankTurkey13%0.8
35、6 Yapi Kredi BankasiTurkey16%1.14 Samba Financial GroupSaudi Arabia17%1.18 Union National BankUAE11%0.58 First Gulf BankUAE17%1.13 Bank VTB OAORussia14%0.83 Albaraka TurkTurkey15%0.92 HalkbankTurkey22%1.38 Sberbank RFRussia22%1.10 ExpensiveCheap Source: HSBC estimates 6 Equity Strategy Global Emergi
36、ng Markets 14 November 2012 abc The new mortgage law will, in the long run, lead to greater affordability among home buyers, but we expect banks to be conservative over the next two years as they try to understand the new rules. Elsewhere in the Gulf, we also like Dubai real estate both on the impro
37、vement in the local cycle, but also as a play on hospitality and broader EM real estate spending (not least Egypt). Mortgage penetration in developing countries (2011) Source: IMF, SAMA, Ministry of finance SA, Central bank of UAE By contrast for South African real estate, as with banks, both the se
38、cular and cyclical impulses are negative. Macroeconomic risks appear skewed to the downside and any positive influence from further modest monetary easing is likely to be offset by softer growth numbers. With regard to direct consumer plays, one broad implication of Karen and Frederics piece seems t
39、o be that investors should prefer discretionary to staples (since food should take up a diminishing proportion of the expenditure aggregate). In fact, it is not quite as straightforward as this since quoted organised retail has in many countries the potential to take considerable market share from t
40、he informal sector. Nevertheless, the cocktail of a relatively weaker trend in consumer spending and higher input costs from upward pressure on soft commodity prices does, in some cases, create headwinds for the sector. Equally staples have been seen as a safe haven through the endless risk-on-risk-
41、off iterations. To the extent that market conditions stabilise, the fundamentals should gradually get traction. Indeed, in general, in our coverage, we do prefer discretionary here, by way of illustration in CEEMEA outside the Gulf, HSBC has 7 Overweight recommendations and 7 Neutral or Underweight
42、recommendations compared with 2 Overweight recommendations to 10 Neutral and Underweight in the staples segment. In general, within the CEEMEA universe, we think Turkey offers some of the best plays on the consumer discretionary theme. Not only do we expect the spending trajectory in Turkey in this
43、category to be relatively strong, but there are also straightforward ways to express this in terms of Mortgage to GDP versus GDP/capita (LHS, USD) 2011 Source: Central Banks, HSBC estimates 7 Equity Strategy Global Emerging Markets 14 November 2012 abc stock market representation. We would focus on
44、some of the holding companies, white goods, speciality retail, transport and media. In these sectors in many cases earnings are determined by external as well as domestic demand, but in many instances the Turkish consumer is still an important driver. In South Africa, which has wide stock market rep
45、resentation on the consumer side, HSBC does not cover the retail segment. However, we do not think that the macro environment facing these names looks anything like as strong as that in Turkey, for example, either near term or long term. Nevertheless, while we do not expect hotel and restaurant spen
46、ding growth to be as dynamic as in many other EMs, it is still better than in most of the developed world, and we have some positive recommendations in the SA hotels, restaurants and leisure segment. Yet not all consumer segments are expected to grow as rapidly; in particular in line with the relati
47、ve reduction in food spending discussed above we do not expect food producers to perform as strongly as the discretionary segment. There are some themes that could perform for example, because organised retail is under-represented and there is disproportionate scope for growth (eg, Russia and Saudi
48、Arabia), or because of exposure to external geographies where food demand is still growing rapidly (eg, sub-Saharan Africa). Yet in general, we are less enthusiastic about consumer staples. The same point applies to telecoms penetration rates are already high, so the incremental growth rate is likel
49、y to be less high than it is in other categories of consumer spending. Of course, as always, there are exceptions not all regions are highly penetrated (eg, sub-Saharan Africa) and in some cases certain types of product demand are still growing strongly (Russian data). Equally there are some special situations (Egypt). Yet overall we do not think that telecoms is generically the best vehicl