eurozone equities: a bull market driven by smaller caps? · 2 contents non contractual document...

Frédérique Caron, CFA

European SMID cap Equity Fund ManagerHSBC Global Asset Management (France)

Eurozone equities: a bull market driven by smaller caps?

Presentation only intended for professional investors as defined by MIFID and should not be

distributed to or relied upon by Retail Clients. The information contained in this presentation is

not intended as investment advice or recommendation. Non contractual document

Frédéric Leguay

Head of European EquityHSBC Global Asset Management (France)

10 Octobre 2017

2

Contents

Non contractual document

Eurozone equity market review and outlook Section 1

HSBC Global Asset Management

Organisation and AUM Section 2

Attractiveness of small and mid cap companies in the Eurozone Section 3

HSBC GIF Euroland Equity Smaller Companies

– Investment philosophy and process Section 4

– Performance review Section 5

Appendices

– HSBC GIF Euroland Equity: performance review Section 6

Eurozone equity market review and outlook


4

98

100

102

104

106

108

110

112

114

116

12/2016 01/2017 02/2017 03/2017 04/2017 05/2017 06/2017 07/2017 08/2017

S&P 500 (NR) MSCI Europe (NR) MSCI EMU (NR)

US and Europe equity markets: YTD in reviewOptimism tempered by interest rates and "digital disruptions"

Source: HSBC Global Asset Management as at 29.09.2017. For illustrative purposes only.

The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management (France) on the markets, according to the information available to date.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Performance net dividend reinvested

Period: December 2016 to September 2017

-30% -10% 10% 30%

IrelandUK

SwitzerlandBelgium

Germany

SpainNetherlands

ItalyDenmark

Austria

Food Ret.EnergyLeisure

Health Care EquiptRetailing

MediaCom Services

Telecom

Cap. GoodsHPC

UtilitiesBanks

Div. FinancialsTransportation

Cons. DurablesSemiconductors

H. Div%Risk W%

ValueTot. Y%

MomentumEMU

QualityEqual W%

Mid CapGrowth

09/2017

YTD Performances (EUR)

Commentary from

Central Banks (Europe,

US) tempers optimism

as from May 2017

Sectors

affected by

"digital

disruptions"

5

-50

-40

-30

-20

-10

0

10

60

70

80

90

100

110

120

04/1985 04/1988 04/1991 04/1994 04/1997 04/2000 04/2003 04/2006 04/2009 04/2012 04/2015

European Commission Economic Sentiment European Commission Manufacturing Confidence

Euroland macroeconomic expansionEconomic momentum remain strong

European Central Bank – Eurozone Economic Indicators

Period: April 1985 to September 2017

Source: ECB – Economic indicators as at 29.09.2017. For illustrative purposes only.


(RHS)(LHS)

09/2017

6

-1,5

-1

-0,5

0

0,5

1

1,5

2

2,5

12/2006 12/2008 12/2010 12/2012 12/2014 12/2016

Euroland Macroeconomic perceived risksInvestors still don't believe it: uncertainty is at a 10-year low!

Euroland macroeconomic uncertainty indicator (proprietary – Z-Score)

Period: Dec. 2006 to Sep. 2017

Source: HSBC Global Asset Management, Merrill Lynch, Bloomberg as at 29.09.2017. For illustrative purposes only.

*Macroeconomic indicator: credit spread, bond spread, volatility, bank CDS, ECB economic sentiment, inflation prospect


09/2017

Macroeconomic indicator sentiment*

7

0

50 000 000 000

100 000 000 000

150 000 000 000

200 000 000 000

250 000 000 000

300 000 000 000

350 000 000 000

12/1999 12/2001 12/2003 12/2005 12/2007 12/2009 12/2011 12/2013 12/2015

European markets: Trading activityA new low in investors' interest?

3-Month cumulative number of shares traded on European markets

Period: Dec. 1999 to Sep. 2017

Source: HSBC Global Asset Management, Bloomberg as at 29.09.2017. For illustrative purposes only.


09/2017

8

-1,4

-1,2

-1

-0,8

-0,6

-0,4

-0,2

0

0,2

1

1,05

1,1

1,15

1,2

1,25

Euro Dollar

2017 GDP Growth (EZ minus US)

70

75

80

85

90

95

100

105

110

115

ECB Harmonised Competetiveness

Bank of England Calculated Effective FX (reb.)

Under-competitive

Over-competitive

European Central Bank Indicators

Period: January 1996 to September 2017

A stronger Euro?Shouldn't be a concern for investors

Source: Datastream as at 29.09.2017. For illustrative purposes only.

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.

Currency and GDP growth

Period: March 2015 to September 2017

(RHS)

(LHS)

9 Non contractual document

A stronger Euro?A marginal impact on earnings revisions

Earnings revision ratio (29.09.2017)

Source: HSBC Global Asset Management, MSCI, IBES, Factset, Morgan Stanley Research, Consensus Earnings Estimates over time, as at 29.09.2017.


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.



A stronger Euro?Earnings consequences: A historical and statistical prospective

Earnings sensitivity to a change in Euro Dollar

Period: April 1999 to August 2017

Source: Bloomberg as at 31.08.2017. Slope of the regression line between relative earning changes and change in Euro Dollar. For illustrative purposes only.

Dark bars suggest statistically significant

(T-Stat > 1.50)


A stronger Euro?Expected profit growth so far unaffected

Source: MSCI EMU – Consensus Next 12-month Earnings Estimates over time. Sources: Global Asset Management and MSCI, MSCI, IBES, Factset, Morgan Stanley Research as at 29.09.2017.

Note: Data calculated before goodwill and in local currency terms.




The figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Eurozone Consensus Profit Estimates (EURm)

FIN COD COS ENE IND MAT INF TEL HEA UTI MKT

From previous peak -58.8% 0.0% -2.6% -64.3% -1.9% -48.3% -3.2% -46.8% 0.0% -54.0% -30.8%

Trend growth 1996-2006 10.2% 4.9% 8.3% 15.2% 6.1% 6.4% 2.8% 11.3% 8.0% 7.9% 8.3%

Trend growth 2007-2016 -7.4% 8.0% 3.7% -7.1% 1.4% -3.8% 1.7% -7.4% 4.9% -7.6% -1.9%


Europe absolute valuations: Above long-term averages

NTM PE in Europe

Period: December 1987 to September 2017

Source: Datastream, Morgan Stanley, MSCI as at 29.09.2017. For illustrative purposes only.





09/2017

US PE with European

sector breakdown TMT Bubble


European equities: Long-term valuation measuresTrading at a historical discount to the US




Relative Long-Term Valuation Measures (Europe vs. US) – Z-Score

Period: December 1980 to August 2017


Europe: "Value" Calling!Valuation dispersion remains high for this stage of the market cycle




Value spread (Price to book: expensive/cheapest) and average volatility in the US and Europe – Z-Score

Period: February 1999 to August 2017

Value spread level indicates that

investors still have concern about the

improving economic environment and

have not yet reinvested in "value"

Low volatility indicates that investors

are more relaxed


0

50

100

150

200

250

300

350

400

450

MSCI Europe International Cyclicals

International Defensives Domestic Cyclicals

Domestic Defensives Resources

0 25 50 75 100

Real Estate

Retailing

Utilities

Food Staples Retailing

Telecommunication Services

Banks

Transportation

Media

Insurance

Consumer Services

Software Services

Commercial Professional Services

Diversified Financials

Automobiles Components

Capital Goods

Consumer Durables Apparel

Health Care Equipment Services

Food Beverage Tobacco

Pharmaceuticals Biotechnology…

Household Personal Products

Materials

Semiconductors Semiconductor…

Technology Hardware Equipment

Energy

Europe North America Asia Pacific Other EM

Accelerating EurozoneDomestics (defensive & cyclicals) are late in their earnings cycle

MSCI Europe EPS of the various market segment

Period: Jan. 2001 to Sep. 2017

Source: MSCI, Bloomberg, Morgan Stanley, HSBC Global Asset Management. Slope of the regression line between industry groups' relative performance and absolute change in Euro Dollar. For

illustrative purposes only.




2017e geographical revenue exposure of

the MSCI Europe industry groups

Period: April 1999 to August 2017e


Accelerating EurozoneWith a large gap (cost of equity/cost of debt), corporates could look to releverage

Source: Datastream, Morgan Stanley, MSCI. For illustrative purposes only.





MSCI Europe Estimated cost of Equity vs the Ibbox

cost of corporate debt

Period: June 1998 to August 2017

-2,5%-2,0%-1,5%-1,0%-0,5%0,0%0,5%1,0%1,5%2,0%2,5%3,0%

Europe US

0%

2%

4%

6%

8%

10%

12%

14%

Cost of Equity Cost of Debt

Estimated growth in share count: MSCI Europe vs.

MSCI US

Period: 2006 to Sept. 2017

More Equity

Less Equity


Semis

Health Care

SoftwareHousehold Prod

Cons Dur

Materials

Food Retail

Cap GoodsRetailing

Food & BevCons Serv

Comm Serv

Div Fin

Pharma

Transport

Media

Tech Hardware

Autos

Energy

Real Estate

Telecomms

Utilities

Banks

Insurance

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

25% 45% 65% 85% 105% 125% 145% 165%

Relative expected 2017-2019 dividend growth (CAGR)

Relative expected NTM dividend yield (P/Out adjusted) Not so attractive

Attractive

Accelerating Eurozone: "A bird in the hand!"Visibility suggests to favor sectors that combine yield and dividend growth

Source: Datastream, Morgan Stanley, MSCI as at 29.09.2017. Adjustment on pay out based on statistical study from December 1996 to September 2017. For illustrative purposes only.



projection or target. The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

MSCI Europe Relative expected dividend yield vs. MSCI Europe relative expected dividend growth (29.09.2017)


Risks

Source: HSBC Global Asset Management. For illustrative purposes only.

Bond yields overshoot

US economic cycle weakens

China's transformation

Excessive currency volatility

Political uncertainties

Disruption in economic models

New financial asset bubbles

HSBC Global Asset Management

Organisation and AUM


OrganisationParis European SMID cap equity investment team


Source: HSBC Global Asset Management. As of August 2017. ( x ) Years of industry experience. For illustrative purposes only. *Formal integration of ESG criteria were implemented as of 2012.

Frédéric Leguay (29)

Head of European Equity

Denis Grandjean (27)

Head of Equity & ESG

Research

Frédérique Caron

(16)

INTEGRATED

EXPERIENCE

COMMITTED

STABLE

Laura Fauveau (4)

Benoit Olle-Laprune

(23)

Eric Hazart (25)

Florence Tassan (19)

Aloys Goichon (13)

Guillaume d’Harcourt

(38)

Cédric Carpentier (15)

Financial Engineer

Christophe Peroni

(21)

"15 European Large and SMID cap Equity Fund Managers based in Paris with on average over 20-year industry experience"

Anthony Eagleton

(24)

Product SpecialistAbderrahman Belcaid

(11)

François Travaillé

(30)

Pascal Pierre (19)

Head of Thematic

Equity


* Employees’ Stock Ownership Plans Plans

Source: HSBC Global Asset Management as at 30.06.2017

HSBC Global Asset Management: Equity specialistCapabilities managed in Paris


Active fundamental stock selection

Long-dated track record

Robust long-term performance– Consistently in 1st or 2nd quartile; 3 & 5Y periods

– Focus on delivering high risk adjusted returns

Strategy Geography

Core (large cap) Europe, Europe ex UK, Euroland, France

Volatility Focused Europe, Europe ex UK

Dividend/Income Europe

SMID Europe, Euroland, France

Strategy Launch date Process upgrade

Core (large cap) 1980 2004

Dividend/Income 2003 2012

SMID 1998 2003

European equities: Assets under management by type

(30.06.2017)

Core (large cap):

EUR6.8 bn

Dividend/Income:

EUR544.0 ml

SMID:

EUR1.06 bn

Other*:

EUR1.2 bn

Attractiveness of small & mid cap companies

in the Eurozone


23

-60

-40

-20

0

20

40

60

2002 2004 2006 2008 2010 2012 2014 2016

MSCI EMU Large MSCI EMU Mid Cap MSCI EMU Small Cap

Attractiveness of small and mid cap companies in the EurozoneHigher performance on the long term, higher earnings prospects


Performance exhibit of EMU Large, Mid and Small

Caps as at 29.09.2017 (%)

Source: HSBC Global Asset Management, MSCI, FactSet. For illustrative purposes only.




100

300

500

700

900

1100

1300

1500

1700

1900

2100

2300

2500

2700

2900

3100

3300

MSCI Europe Large Cap MSCI Europe Mid Cap

MSCI Europe Small Cap

Performance of European Large, Mid and Small Caps

from Dec. 1981 to Sept. 2017

Dec. 1981 - Sep.2017 Small Mid Large

Annualised Returns 10.12% 8.31% 6.77%

Annualised Volatility 16.14% 15.88% 15.19%

3035.4%

1635.3%

941.8%

(Price only)

The price index provides the equity returns excluding dividends. The total return index includes

dividends. Volatility is based on monthly returns

(Price only)(Price only)

24

Attractiveness of small and mid cap companies in the EurozoneA large universe


Source: HSBC Global Asset Management, MSCI, FactSet, MSCI All Caps Europe, at 31.12.2016. For illustrative purposes only.

* Market cap. figures as at 29.09.2017

The content of this page is historic and contains information that is not current. It is not intended as advice or a recommendation to buy or sell any sector or financial instrument.

EMU companies

Weight

% of number

of companies

% of

market cap

Large caps 13% 79%

Mid caps 16% 14%

Small caps 29% 5%

Micro caps 42% 1%

Total 100% 100%

MSCI All Caps Europe: around 2,700 companies

EMU companies: around 1,300

Among the EMU companies:

– 13% are large caps and represent 79% of the total market cap

– 87% of the companies are small and mid caps and represent

21% of the total market cap

Example of large cap company: Total

– French oil company with €113.7bn market capitalisation*

Example of mid cap company: Ingenico

– French/global leader in seamless payment with €5.0bn market

capitalisation*

Example of small cap company: Kinepolis

– Movie theatres operator (Belgium) with €1.5bn market

capitalisation*

Large Caps market cap > €8bn

Mid Caps €2bn < market cap < €8bn

Small Caps €250m < market cap < €2bn

Micro Caps market cap < €250m

25

Attractiveness of small and mid cap companies in the Eurozone Offering diversification benefits with many market leaders in niche markets


Source: HSBC Global Asset Management. Market cap. figures as at 29.09.2017. For illustrative purposes only.


IMA: €3.2bn market cap

World leader in the design and manufacture of automatic machines for the processing and packaging of

pharmaceuticals, cosmetics, food, tea and coffee

5,000 employees

IMA is the world leader in tea bagging machines with a 70% market share

Teleperformance: €7.3bn market cap

Worldwide leader in outsourced omnichannel customer experience management

217,000 employees

Fragmented market: top 5 representing 20% of the outsourced market (USD), which includes Teleperformance’s

leading 6% share

Kinepolis: €1.5bn market cap

Cinema group with 46 multiplexes spread across Belgium, France, Spain, Luxembourg, Switzerland

and Poland

2,300 employees

Strong market share in Belgium

26

Attractiveness of small and mid cap companies in the EurozoneGeographical breakdown


Source: HSBC Global Asset Management, MSCI, FactSet, MSCI All Caps Europe as at 31.12.2016. For illustrative purposes only.


In the EMU small and mid cap companies, the weightings of France, Germany and Italy are significant

24,1%23,2%

15,4%

9,9%

6,9% 6,8%6,1%

3,8%2,5%

1,4%

0%

5%

10%

15%

20%

25%

30%

France Germany Italy Spain Belgium Netherlands Finland Austria Ireland Portugal

27

Attractiveness of small and mid cap companies in the Eurozone Sector breakdown


Industrials and Information Technology represent a significant part of the EMU small and mid cap companies

Source: HSBC Global Asset Management, MSCI, FactSet, MSCI All Caps Europe as at 31.12.2016. For illustrative purposes only.


0%

5%

10%

15%

20%

25%

30%

ConsumerDis.

ConsumerStaples

Energy Financials Health Care Industrials IT Materials Real Estate Telecom.Services

Utilities

Large Mid Small Micro





28

Attractiveness of small and mid cap companies in the EurozoneLess covered by sell-side research, looking for the giants of tomorrow


Sell-side research coverage (31.12.2016) Share price (06.01.2017)

Source: HSBC Global Asset Management, MSCI, FactSet. MSCI All Caps Europe. For illustrative purposes only.


24

14

6

1

0

5

10

15

20

25

30

Large Mid Small Micro

(in bn EUR)

0

20

40

60

80

100

120

09/1990 09/1997 09/2004 09/2011

Source: Bloomberg

Essilor is the world leader for corrective lenses and has been

listed since 1975

03/01/2005

Entry in CAC 40

€5.7bn market cap

18/06/2012

Entry in €Stoxx 50

€11.6bn market cap

20/05/2016

€24.5bn market cap





01/2017


Investment philosophy and process


30

What drives small and mid caps



Growth: stock

prices are pulled by

investments that

generate rising

cash-flows

Re-rating:

restructuring assets

pave the way to

strong rerating

Value

Time

Stock Price

Cash-Flows

Capital Employed

31

Historic sustainable growth stock example: Teleperformance




Global leader – call centers – client relationship

management with a 6% market share

1. Organic growth

– Teleperformance continues to grow as a result of a

sustainable market model based on clients outsourcing

their call centers and forecasts a revenue growth of +5-6%

above market CAGR 2016-2020

2. External growth

– In 2016, Teleperformance acquired LanguageLine

Solutions

– USD388m sales and USD147m EBITDA in 2015

– EPS accretive > +15% beyond 2016

– This acquisition should add 1 - 2 % to Teleperformance

revenue growth CAGR 2016-2020, and 200/250 bp

additional EBITA margin

3. Valuation

– Valuation of the stock is supported by regular upward

revisions of estimated profitability

– The company vision is to be a €5bn revenue highly

profitable market leader by 2020, with at least 14%

operating margin

Source: Teleperformance financial publication, August 2016. This example is historical and contains

information that is not current.

0

1 000

2 000

3 000

4 000

5 000

6 000

0

100

200

300

400

Total assets (RHS) Operating Income (LHS)

Historical market cap (RHS)

Source: Bloomberg, HSBC Global Asset Management as at 31.12.2016.

EUR Million 31.12.2016 Growth since 2005 (CAGR in %)

Total Assets 5 011 +15.17%

Operating

Income342 +10.70%

Capitalisation 5 506 +17.52%

Source: Bloomberg, HSBC Global Asset Management as at 31.12.2016.

(EUR Million)(EUR Million)

32

Restructuring stock example: Faurecia


Faurecia is an auto equipment supplier active in 3 main

business areas: Faurecia Seating, Interiors and Faurecia

Clean Mobility

1. Strong improvement over the last 10 years

– Improvement in profitability 5.2% in 2016 versus 1.1% in

2006

– Net cash flow of €459 millions in 2016

– Net debt €342 millions end of 2016 versus €1,519 millions

end of 2013

2. An attractive valuation

– Faurecia trades at 0.35 EV/sales 2017

3. Promising mid-term financial targets

– 6% CAGR (Value Added) sales 2016-2018, 7% operating

margin (on VA sales) in 2018, net cash flow > €500 millions

in 2018

– Focus on higher profitability businesses

– Acquisition?

Source: HSBC Global Asset Management, Factset as at 31.12.2016. For illustrative purposes only.


Dec '16

(preliminary) Dec '15 Dec '14 Dec '13 Dec '12 Dec '11 Dec '10 Dec '09 Dec '08 Dec '07 Dec '06

Income Statement

Sales 18,711.50 18,770.40 18,828.90 18,028.60 17,364.50 16,190.20 13,795.90 9,292.20 12,010.70 12,660.70 11,648.70

Sales Growth (%) (0.32) (0.31) 4.44 3.82 7.25 17.36 48.47 (22.63) (5.13) 8.69 6.10

EBIT Margin (%) 5.21 4.44 3.59 2.98 2.94 4.01 3.20 (1.03) 0.76 0.96 1.16

Net Income Growth (%) 44.53 87.69 82.69 (37.41) (60.98) 84.09 -- 24.57 (142.02) 46.97 (145.43)

Net Margin (%) 2.40 1.66 0.88 0.50 0.83 2.29 1.46 (4.67) (4.79) (1.88) (3.85)

Balance Sheet

Net Debt / Total Equity (%) 11.50 39.45 80.51 100.91 137.88 105.57 146.14 539.16 780.73 199.33 164.12

Return on Equity (%) 16.84 15.12 10.30 6.46 11.78 37.80 37.79 (188.60) (114.40) (25.98) (35.80)

European auto equipment supplier valuation

EV/Sales 2017

Faurecia

Valeo

Plastic Omnium

Duerr

hella

Brembo

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

0% 5% 10% 15%

Faurecia Valeo Plastic Omnium Duerr hella Brembo

Operating margin (%)

Source: FactSet as at March 2017

33

Our investment process


Source: HSBC Global Asset Management as at December 2016. For illustrative purposes only.

Representative overview of the investment process, which may differ by product, client mandate or market conditions.

Illustration of investment universe and typical holdings

Profitability/Valuation

We aim to identify future outperformers within the

Eurozone SMID universe as:

1. Mainly companies with sustainable growth

prospects based on:

– Company specific competitive advantages through

innovation, unique business processes, niche products…

– Company that are benefiting from strong growth drivers

whether it be globally-driven (ex: ageing of population),

industry-driven (ex: digitalization of the economy) or

company specific (ex: new technology)

– Companies with recurring superior profitability

– Cash is reinvested in company in order to capitalize on

higher economic returns

2. Restructuring or deep value stories

– Former larger companies whose market cap has dropped

and that are significantly undervalued; typically large

weights in the index

– Company re-rating is dependent on a catalyst (restructuring

assets, cyclical recovery, M&A…) leading to a

reassessment of capital employed and profitability recovery

– Stocks are typically highly volatile due to strong uncertainty

Allocation between the two company profiles may change over time depending on economic and financial

environment

Good knowledge of companies and regular meetings with managements is a key stone of our investment process

Company within the SMID universe

GrowthHighly

attractiveRestructuring Good / Sustainable

Growth prospects

Less

attractive

34

Eurozone SMIDInvestment process overview




Risk management

Ste

p 4

≈ 400 “well positioned” candidates

Proprietary modelling« Sustainable growth » indicator

Based on stability and growth in

earnings

Sector neutral approach

Valuation

Based on HSBC global

PB-ROE model

Sector neutral approach

Ste

p 1

≈ 80 – 100 eligible companies

Detailed analysis of growth drivers

based on:

On-going meetings with companies

Company specifics

Macro/thematic changes in

environment

ESG characteristics

2 types of holdings

(1) Sustainable growth

(2) Turnarounds & special situations

In-depth company Valuation based

on:

In-house growth assumptions

Quality of management

ESG characteristics

Ste

p 2

45-60 high conviction holdings

Portfolio constructionRisk analysis

(adequate diversification and

ESG criteria)

Short-term liquidity

and technical

Ste

p 3

Identify companies that

(1) generate sustainable growth and/or (2) unlock shareholder return (3) ESG assessment

Eurozone ≈ 1 000 companies

Small & mid cap market cap < EUR10bn

Liquidity constraint > EUR200k daily turnover (≈ 700 companies)

Meetings with company

management

Meetings on site and in our offices,

seminars and group presentations

~ 600 meetings per year

- Meetings partitioned among 4 small

& mid managers/analysts

- Constant exchanges among

managers (informally on a daily basis

and formally on a weekly and monthly

basis)

- Support from the Large Cap team of

analysts for specific companies

exceeding €1bn in market

capitalisation

Teamwork

35

Business case and company analysis report




These reports allow for full transparency of information for all team members

Each team member can access and update the reports which ensures ample coverage of companies within the

investment universe

Description of the

company activity

Main

financials

Valuation ratios

Identification of growth

drivers,

SWOT analysis

Investment case,

summary of previous

meetings

Main

shareholders

Company

guidance

36

Formal and informal team interaction


Informal discussions

regarding the latest company

announcements within the

team’s investment universe

At any moment, the team can

consult and update the

business case and company

analysis reports

Daily

Market performance review

Portfolio(s) performance

reviews

Main investment decisions

reviews

Discussions regarding

potential investment decisions

Review travel plans and

conference scheduled

Monthly committees

Investment decisions reviews

Discussions about the latest

news regarding potential

investments or current

holdings

Review company visits

Weekly



37

Integration of ESG criteria is key in our stock selection




For additional information related to the voting policy and the exercise of voting rights is available in the annual report, please refer to the following website:

http://www.assetmanagement.hsbc.com/fr/footer/politique.html

• In addition to financial analysis,

each investment case undergoes

ESG analysis:

1) Absolute: how the company

conforms to the 10 principles of

the UN Global Compact:

- « High Risk » : proven breach

- « Medium Risk » : alleged

breach

- « Low Risk »: no breach

2) Relative: company ranking

relative to our 30 proprietary

ESG sector ratings (derived

from MSCI GICS):

- « High Risk » : 0 to 5th

percentile

- « Medium Risk » : 5th to 20th

percentile

- « Low Risk »: 20th to 100th

percentile)

• The two rating outcomes are

combined to create a final ESG risk

rating: Low, Medium or High

• All companies considered for

purchase are subject to ESG

analysis

• Companies held in the portfolio

are monitored and should be

challenged at all times

• Market events will change the

risk profile (low, medium, high)

of a company over time

• Holding or investing in a « High

Risk » company requires:

An enhanced «Due

Diligence»

Senior management

approval: Local CIO for

Equities; Committee chaired

by the Global Head of Credit

Research for Fixed income

This is included in the FIM

• We rely on external providers

for our database:

- Equity and Fixed Income:

MSCI ESG Research, GMI,

Ethix, Sustainalytics

- Country analysis and SOE

(State Owned Enterprises;

not listed): Oekom

- Carbon: Trucost Research

• Our Global ESG intranet

platform is used by portfolio

managers and analysts. Here

they find:

- Company reports from data

providers Internal

- " Executive Summary "

reports

- Company risk ratings

(High, Medium and Low)

- Portfolio level ESG ratings

and carbon footprints

calculations

• Our voting policy aims to

favour good governance

practice with an objective to

meet HSBC Group values

• We publish an annual report

which includes summarised

voting decisions and if

applicable, reasons for which

we are not supportive with

resolutions

• It’s framed around global

guidelines and local

supplements

• Europe voting policy was

made fully homogeneous

during Q1 2017

• We employ a dedicated

"Engagement" team who is

responsible to meet with

companies we are invested in.

Here, the engagement team

will raise controversies and

issues

• The aim of the team’s

engagement actions is to

create awareness and

increase comprehension on

HSBC’s concerns and

expectations

• In accordance with the results

of this engagement activity,

voting decisions or decisions

to sell the company may be

taken

Combined

approach:

absolute

and relative

Company

CoverageOwnership

Voting

policyEngagement

38

Portfolio construction




The above mentioned targets/limits/objectives is/are to be considered on the recommended minimum investment period and do not constitute a commitment from HSBC Global Asset Management; there

can be no assurance that the strategy of the fund will achieve this objective.

When building and monitoring our portfolio, companies must meet requirements for adequate diversification and

minimum liquidity. They must also be technically attractive

Risk Solution

No sector constraint

Sector weightings are monitoredDiversification

We build/exit positions in a timely manner (90% at 5 days) Liquidity

We have a dedicated trading team for small and mid cap portfolios;

Trading market data analysisTrading

We target a 4-8% tracking error for small caps and 3-5% for mid caps

to achieve outperformance over a 5-year investment horizon Relative

39

Risk management processThree lines of defence model


Source: HSBC Global Asset Management, as at June 2017. For illustrative purposes only. Representative overview of the investment process, which may differ by product and or asset class, client

mandate or market conditions. HSBC Global Asset Management and HSBC Group have committees at business, country, regional and global levels to oversee risk exposures against risk appetite and the

effective operation of the control environment.

1. Primary responsibility for adherence lies with the portfolio managers. The tools used may be run by or supported by first or second line functions depending upon local structures.

2. Predominantly post-trade, but also undertaken pre-trade where appropriate.

First line1 Second line2 Third line3

Responsible for identifying, recording, reporting and managing risks, and ensuring that

the right controls and assessments are in place to mitigate these risks

Risk specialists who set policy and guidelines for managing risk,

and provide advice and guidance on effective risk management

Independently ensures the

effective management of risk

Risk Calibration

Agree fund by fund specific risk metrics

considering:

– Fund objectives, including

performance and volatility

– Investment strategies employed

– Liquidity and number of holdings

Portfolio managers

Validation of investment and credit

guidelines

Fundamental and valuation

recommendations

Security eligibility and markets

Dealing process

Coherence of orders

Counterparty risks

Pre-trade checks (limits, counterparties,

issuers, instruments, etc)

Portfolio Risk

Pre-trade checks for consistency with

in-house guidelines, client and

regulatory limits1

Pre-trade/trade

Middle Office

Daily valuation reconciliation

Trades and positions control; reconciliation with

valuation agent, custodian and clearer

Portfolio Managers

Monitor risk guidelines and portfolio constraints

Monitor market risks

Quantitative risk metrics

Decide on rebalancing

Research2

Monitor economic and credit events

Investment universe

Business Risk2

Facilitate the Risk and Control Assessment

Process

Implement on-going testing of key business

controls

Portfolio Risk/Control

Post-trade checks for consistency with in-house

guidelines, client and regulatory limits1

Monitoring investment decisions coherence with

portfolios’ objectives

Daily, monthly and quarterly monitoring of

investment guidelines and restrictions1

Portfolio analytics, including performance, risk

and attribution

Post-trade

Risk Management

Oversees all aspects of risk and

monitors responses to risk events

Portfolio Risk/Compliance

Analysis of risk framework.

Determination and monitoring of

key risk metrics for each fund (eg.

TE, VaR, duration, etc)

Validate front office models

Monitors performance and return

volatility

Pre- and post-trade checks for

consistency with in-house

guidelines, client and regulatory

limits1

Liquidity and Counterparty Risk

Agree liquidity framework for all

funds

Approval of all counterparties and

control of exposure limits

Liquidity monitoring, including any

regulatory requirements

Investment and Market risk

Advising on and setting

policies and procedures

Identifying and assessing

significant risk areas

Providing business with advice

and support

Oversight and monitoring of

business activities

Supporting the business to

meet changing regulation

Operational Risk

Define the overall policy for

operational risk management

and provide advice and

guidance on this

Ensure the business is run in

accordance with risk appetite,

through monitoring, reporting

and challenge

Risk & Compliance

HSBC’s Audit

Thematic audits

Regular on-site audits

Follow up of audit

recommendations

Internal Audit


Performance review


41

Small and mid caps: market outlook


Source: HSBC Global Asset Management, Bloomberg as at September 2017. For illustrative purposes only.


The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management (France) 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.

Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC Global Asset Management accepts no liability for any failure to

meet such forecasts. projections or targets.

Valuation: in our view levels are relatively reasonable (PE of 17.8x 12 months forward for small caps and PE 15.6x

12 months forward for mid-caps). NTM EPS growth is expected to be above 15%

M&A activity: is still a good support

– In the current low interest rate environment, large cap companies, are looking for growth opportunities (acquisitions of smaller

companies). Example: in May 2016, Total (oil) made an offer on Saft (advanced-technology battery producer for industrials), with a

35% premium

– International players are also interested in the expertise of European market leaders in a number of industries:

– US roofing and waterproofing Standard Industry made a cash offer (September 2016) for German roof tile maker Braas

Monnier, with a 15% premium (€1bn)

– In December 2016, Japanese Sumitomo Corporation made a cash offer for Irish company Fyffes, a tropical produce importer

and distributor in Europe, with a 50% premium

– In January 2017, Safran made an offer on Zodiac, a leader in aircraft equipment, with a 25% premium

– In June 2017, the Blackstone private equity fund made a cash offer for Finnish real estate company Sponda with a 20%

premium

Small and Mid Cap companies should benefit from the ongoing economic recovery in the Eurozone

Risks: uncertainties could imply higher volatility but also may provide investment opportunities:

– US political uncertainty and Brexit

– Timing and size of interest rate hikes

– Exchange rates and raw material price developments

42

HSBC GIF Euroland Equity Smaller Companies (I)AUM: EUR471.9 million as at 29.09.2017


Source: HSBC Global Asset Management as at 29.09.2017. Performance net of fees (I share class).

1. Index given for comparative and illustrative purposes only. The fund is not managed to the index, is actively managed and returns may deviate materially from the performance of the specified index.

2. Data Source – © Copyright 2017 Morningstar. Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed;

and (3) is not warranted to be accurate. complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Allocations is as at the date indicated may not represent current or future allocation and is subject to change without prior notice.

The content of this page is historic and contains information that is not current. It is not intended as an advice or recommendation to buy or sell any sector or financial instrument.

The fund is exposed to the following main risks: small & mid cap, equity, liquidity, loss of capital.


10 Largest holdings Weight

KION GROUP AG 3.35%

TELEPERFORMANCE SE 3.35%

FAURECIA SA - ( EX B.FAURE) 3.11%

ORPEA SA 3.08%

ASR NEDERLAND NV 2.76%

TKH GROUP NV-DUTCH CERT 2.74%

CARGOTEC CORP-B SHS 2.70%

SOPRA STERIA GROUP 2.66%

GRENKE AG 2.51%

ASM INTERNATIONAL NV 2.38%

Total 28.63%

Distribution by capitalisation Weight

Large Caps: > 8bn 17.81%

Mid Caps: > 2bn & < 8bn 69.01%

Small Caps: > 250m & < 2bn 8.45%

Micro Caps: < 250m 0%

Total 95.27%

Number of holdings: 52 Active share: 87.14%

1st Quartile

2st Quartile

3rd Quartile

4th Quartile

Net cumulative performance (I share)

Since launch – 02.08.2006 – 29.09.2017 (100 = 02.08.2006)

+144.7%

+99.8%

Net performance (IC)

as at 29.09.2017YTD 2017 2016 2015 2014 3 years 5 years

Since launch

(02.08.2006)

HSBC GIF Euroland Equity Smlr Cies (I) 25.0% 2.2% 20.5% 8.5% 58.5% 120.8% 144.7%

MSCI EMU SMID (NR)1 19.0% 3.7% 19.9% 3.8% 51.2% 115.5% 99.8%

Excess Return +6.0% -1.5% +0.6% +4.7% +7.3% +5.2% +44.8%

Morningstar Quartile2 1 2 3 1 2 2 1

43

30,1%

9,9%

6,5% 4,5%3,3%

15,8%

10,7%

5,0% 4,6% 2,4% 2,0% 1,5% 0,0%

23,3%

3,4%

7,6%

4,1%5,3%

15,1%

8,9% 5,8%10,6%

5,2%3,1% 3,1% 4,4%

0%

5%

10%

15%

20%

25%

30%

35%

Industrials Div.Financials

RealEstate

Insurance Banks Cons.Disc.

IT HealthCare

Materials Utilities Energy Telecom. Cons.Staples

HSBC GIF EUROLAND EQUITY SMALLER COMPANIES MSCI EMU SMID Index (NR)*

27,6%

19,0%

14,4%

9,2% 7,3%6,0% 5,8% 3,9%

1,8% 1,6%

24,9% 23,2%

11,6%11,7%

5,4%6,4%

8,0%

3,2%0,0%

3,7%

0%

5%

10%

15%

20%

25%

30%

France Germany Italy Netherlands Belgium Finland Spain Austria Cyprus Ireland

HSBC GIF EUROLAND EQUITY SMALLER COMPANIES MSCI EMU SMID Index (NR)*

HSBC GIF Euroland Equity Smaller CompaniesSector & Country allocation (MTD) as at 29.09.2017


Source: HSBC Global Asset Management.

* Index given for comparative and illustrative purposes only. The fund is not managed to the index, is actively managed and returns may deviate materially from the performance of the specified index.

Allocation is as at the date indicated, may not represent current or future allocation and is subject to change without prior notice.

The content of this page is historic and contains information that is not current. It is not intended as an advice or recommendation to buy or sell any sector or financial instrument.

Sector – average portfolio weight vs comparative index*

Country – average portfolio weight vs comparative index*

44

HSBC GIF Euroland Equity Smaller CompaniesPerformance commentary (YTD) as at 29.09.2017


Source: HSBC Global Asset Management. Data as at 29.09.2017.

1. Index given for comparative and illustrative purposes only. The fund is not managed to the index, is actively managed and returns may deviate materially from the performance of the specified index.

The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management (France) 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.



2017: +25% (IC share class): vs +19.0% MSCI

EMU SMID (NR)1

Stock selection across most sectors was by far the

main reason for outperformance, particularly in the

most cyclical segments such as capital goods

(Faurecia, Kion) and diversified financials (Grenke)

Our Italian stocks performed strongly (IMA, Banca

Ifis). Iren, one of the top player in the Italian multi-

utilities sector, keeps on delivering well on its

business plan and acts as a consolidator in Italy

In contrast, holdings in oil related companies

(Tecnicas Reunidas, Vallourec) declined on weaker

energy prices. Austrian construction company (Porr)

declined on the back of disappointing results and

lower outlook for 2017

5 best contributors to the relative performance

Company Performance

FAURECIA SA - ( EX B.FAURE) 62.14%

KION GROUP AG 54.45%

GRENKE AG 59.65%

BANCA IFIS SPA 80.64%

TKH GROUP NV-DUTCH CERT 49.25%

5 worst contributors to the relative performance

Company Performance

TECNICAS REUNIDAS SA -29.03%

PORR AG -24.32%

FIAT CHRYSLER AUTOMOBILE NV 75.69%

BIC SA -19.45%

TECHNIPFMC PLC -9.61%

45

HSBC GIF Euroland Equity Smaller CompaniesAmong our main convictions


Source: HSBC Global Asset Management as at 29.09.2017.


Cargotec

€3.4bn market cap

Finland

Cargotec is a leading provider of cargo and load handling

It operates 3 main divisions: Mc Gregor (ship cranes), Hiab

(truck cranes) and Kalmar (container port equipment)

Growth drivers: world trade and cargo handling needs in land

and sea transportation, automatisation of ports

Long-term financial targets: 10% operating margin in each

business unit, 15% ROCE

TKH

€2.4bn market cap

Netherlands

Industrial group which used to be a cable manufacturer that is

now designing a wide range of technology driven product and

systems

Attractive tyre manufacturing equipment division, where TKH

has a 70% market share in the outsourced market

The company has identified 7 vertical growth markets with a

potential of

€300-500 million in 3-5 years

Orpea

€6.1bn market cap

France

European leader in integrated Long-Term Care and Post-Acute

Care

Network of 80,000 beds, including 46,700 beds outside France

Growth pipeline of 9,100 beds (restructuring and construction)

Successful international expansion (5.4x since 2011)

Owns a €4bn real-estate portfolio, with an ownership rate of

39%

Kion

€9.6bn market cap

Germany

Industrial trucks and supply chain solutions

Chinese Weichai owns 43.3% of the capital

#1 in Europe, #2 worldwide

Growth drivers: booming in e commerce in Europe, ongoing

economic recovery in Europe

Strategic acquisition of Dematic

Attractive financial midterm targets

46

HSBC GIF Euroland Equity Smaller CompaniesStock examples


Source: HSBC Global Asset Management as at 31.05.2017.


Category Growth drivers Sectors Examples

Digitalization of the

economy/e-commerceNew consumer trends Payment, Media, Logistics

Ingenico, Wirecard, Stroeer,

Kion, Edenred

Innovative product or

service

Outsourcing of some services/product

creating gains in efficiency and

productivity

SSII, software, servicesTeleperformance, TKH, Sopra,

Atos, Grenke

Asset-base

optimization

Install machines for their clients,

allowing them to generate important

revenues over the long term thanks to

maintenance, spare parts and

upgrades

Industrials Cargotec, Valmet, Krones

Category Restructuring drivers Sectors Examples

Restructuring

Improving margins through

improvement of business mix and

healthier balance sheets

Mainly Industrials, Banks

Faurecia, Leonardo-

Finmeccanica, Wienerberger,

Vallourec

Special SituationM&A targets or companies

acquiring/divesting businesses -

Telekom Austria, Salvatore

Ferragamo, Konecranes, Rai

Way, OVS

Appendices

48

HSBC GIF Euroland Equity: net performance (IC share class) AUM EUR824.5 million as at 29.09.2017

Net cumulative performance (IC share class)

Over 5 years 15.12.2006 – 29.09.2017 (100 = 15.12.2006)

Source: HSBC Global Asset Management, MSCI, Morningstar, as at 29.09.2017.

1. Index given for comparative and illustrative purposes only. The fund has no official benchmark.

2. Morningstar fund quartile - category Eurozone Large-Cap Equity: Data Source - © Copyright 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar

and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or

losses arising from any use of this information.


The fund is exposed to the following main risk: equity and loss of capital


Net performance

as at 29.09.2017

YTD

20172016 2015 2014 2013 1 year 3 years 5 years

Since launch

(15.12.2006)

HSBC GIF Euroland Equity (IC) 14.4% 4.7% 11.8% 2.8% 31.6% 26.8% 32.1% 94.2% 54.1%

MSCI EMU (NR)1 13.2% 4.3% 9.8% 4.3% 23.4% 22.2% 29.5% 78.6% 31.5%

Excess Return +1.2% +0.4% +2.0% -1.5% +8.2% +4.5% +2.6% +15.5% +22.6%

Quartile2 1 1 2 2 1 1 2 1 1

Fund

Tracking Error (ex-post 3 years) 3.83%

Number of holdings 57

1st Quartile

2st Quartile

3rd Quartile

4th Quartile

10 Largest holdings Weight

ALLIANZ SE-REG 3.60%

BANCO SANTANDER SA 3.09%

SANOFI 3.07%

ING GROEP NV 3.07%

BAYER AG 3.01%

SOCIETE GENERALE 2.94%

DEUTSCHE POST AG 2.85%

AXA SA 2.63%

UNICREDIT SPA 2.47%

PHILIPS NV 2.30%

Total 29.04%

+54.1%

+31.5%

49

21,6%25,2%

12,9%

8,0%

-0,3%

4,2%

11,4%

22,0%

18,6%

0,8%

17,5% 16,5%10,9% 13,1%

9,2%

3,1%

9,8%

-0,9%

20,5% 19,9%

-5%

0%

5%

10%

15%

20%

25%

30%

Financials Industrials Health Care Cons. Disc. Cons. Stap. Telecom. Materials Energy Utilities IT

HSBC GIF EUROLAND EQUITY MSCI EMU (NR)*

25,2%

17,8%

12,9%9,2%

7,4% 5,7% 5,2% 5,1% 4,8% 3,4%

22,0%

14,4%

8,7%

13,9%10,4%

4,4%

8,4%5,3% 4,8%

7,7%

0%

5%

10%

15%

20%

25%

30%

Financials Industrials Health Care Cons. Disc. Cons. Stap. Telecom. Materials Energy Utilities IT

HSBC GIF EUROLAND EQUITY MSCI EMU (NR)*

HSBC GIF Euroland Equity (YTD)Sector allocation and attribution 30.12.2016 to 29.09.2017

Source: HSBC Global Asset Management, MSCI. For illustrative purposes only.

* Index given for comparative and illustrative purposes only. The fund has no official benchmark.



The performance figures in the document are gross of fees. Returns would be lower once fees are taken into account.


Sector – average portfolio weight vs comparative index*

Sector – portfolio performance vs comparative index*(YTD) Comparative

index performance:

13.2%*

50

HSBC GIF Euroland Equity (gross returns)An illustration of how the fund performs in up and down markets

Source: HSBC Global Asset Management, MSCI. Performance in EUR, gross of fees. Period: 30.09.2004 to 29.09.2017. For illustrative purposes only.

1. As of end of September 2004, the fund has been fully managed following the profitability and valuation investment process.

2. Index given for comparative and illustrative purposes only. The fund has no official benchmark.


The performance figures in the document are gross of fees. Returns would be lower once fees are taken into account.

99

,4%

-58

,5%

10

6,6

%

-33

,4%

28

,3%

-20

,1%

12

3,5

%

-23

,7%

38

,0%

19

1,4

%

88

,5%

-60

,1%

85

,1%

-30

,5%

29

,1%

-17

,2%

10

0,3

%

-23

,7%

30

,3%

11

8,2

%

10

,9%

1,5

%

21

,4%

-2,8

%

-0,8

%

-2,9

%

23

,2%

0,1

%

7,7

%

73

,2%

-150%

-100%

-50%

0%

50%

100%

150%

200%

250%

09.2004 -07.2007

07.2007 -03.2009

03.2009 -02.2011

02.2011 -09.2011

09.2011 -03.2012

03.2012 -06.2012

06.2012 -04.2015

04.2015 -06.2016

06.2016 -09.2017

09.2004 -09.2017

HSBC GIF Euroland Equity (gross of fees) MSCI EMU (NR)² Excess return

The fund tends to "do better" in rising markets and perform "in line" in down markets

Excess return (gross of fees): +73.2% (from September 20041 to September 2017)

Gross performance in up and down periods (from 30.09.2004 to 31.08.2017)

51

Important informationThis presentation is distributed in France, Italy, Spain and Sweden by HSBC Global Asset Management (France), in Switzerland by HSBC Global Asset Management (Switzerland) Ltd and is only intended

for professional investors as defined by MIFID. It is incomplete without the oral briefing provided by the representatives of HSBC Global Asset Management (France). 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 an investment advice 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. The performance figures 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. Funds that invest in securities listed on a stock exchange or market could be affected by general changes in the

stock market. The value of investments can go down as well as up due to equity markets movements. Small and mid cap markets are occasionally affected by a temporary lack of liquidity; they may be

subject to greater fluctuations than large cap markets and be more difficult for the fund manager to buy or sell. All data come from HSBC Global Asset Management (France) unless otherwise specified.

Any third party information has been obtained from sources we believe to be reliable. but which we have not independently verified. Small and mid cap markets are occasionally affected by a temporary

lack of liquidity; they may be subject to greater fluctuations than large cap markets and be more difficult for the fund manager to buy or sell. The funds presented in this document may not be registered

and/or authorised for sale in your country.

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”.

Source: MSCI. The MSCI information may only be used for your internal use. may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial

instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may

not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis. forecast or prediction. The MSCI information is provided on an

“as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI. each of its affiliates and each other person involved in or related to compiling. computing or

creating any MSCI information (collectively. the “MSCI Parties”) expressly disclaims all warranties (including. without limitation. any warranties of originality. accuracy. completeness. timeliness. non-

infringement. merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing. in no event shall any MSCI Party have any liability for any direct.

indirect. special. incidental. punitive. consequential (including. without limitation. lost profits) or any other damages (www.mscibarra.com).

HSBC GIF Euroland Equity Smaller Companies is a sub-fund of HSBC Global Investment Funds, a Luxemburg domiciled SICAV.

Before subscription investors should refer to the Key Investor Document (KIID) of the fund as well as its complete prospectus. For more detailed information on the risks associated with this fund. investors

should refer to the complete prospectus of the fund. Funds that invest in securities listed on a stock exchange or market could be affected by general changes in the stock market. The value of investments

can go down as well as up due to equity markets movements.

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 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.

This document may be distributed in Switzerland only to qualified investors according to Art. 10 para 3, 3bis and 3ter of the Swiss 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., Gartenstrasse 26, P.O. Box, CH-8002 Zurich. Paying agent: HSBC Private Bank (Suisse) S.A., Quai des Bergues 9-17, P. O. Box 2888, CH-1211 Geneva 1. Investors and

potential investors should read and note the risk warnings in the prospectus and relevant KIID. Before subscription, investors should refer to the prospectus for general risk factors and to the KIID for specific risk

factors associated with this fund. Issue and redemption expenses are not taken into consideration in the calculation of performance data.

The fund presented in this document is a sub-fund of HSBC Global Investment Funds, an investment company constituted as a société à capital variable domiciled in Luxemburg. The shares in HSBC Global

Investment Funds have not been and will not be registered under the US Securities Act of 1933 and will not be sold or offered in the United States of America, its territories or possessions and all areas subject

to its jurisdiction, or to United States Persons.

HSBC Global Asset Management is the brand name for the asset management business of HSBC Group. The above document has been produced by HSBC Global Asset Management (France) and has

been approved for distribution/issue by the following entities:

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. Offices: HSBC Global Asset Management (France) - Immeuble Coeur Défense - 110, esplanade du Général Charles de Gaulle - 92400 Courbevoie - La Défense 4 – France.

(Website: www.assetmanagement.hsbc.com/fr).

HSBC Global Asset Management (Switzerland) Limited - Gartenstrasse 26, P.O. Box, CH-8002 Zurich. Paying agent: HSBC Private Bank (Suisse) S.A., Quai des Bergues 9-17, P. O. Box 2888, CH-

1211 Geneva 1 In respect of the units distributed in Switzerland, the competent courts shall have exclusive venue at the registered office of the Representative in Switzerland. The official documents as per

Art. 13a CISO as well as the (Semi-)Annual Report of the Fund may be obtained free of charge at the office of the Representative in Switzerland. (Website: www.assetmanagement.hsbc.com/ch)

Copyright © 2017, HSBC Global Asset Management (France). All rights reserved.

Non contractual document updated in October 2017. AMFR_Ext_622_2017Non contractual document

http://www.mscibarra.com/

http://www.assetmanagement.hsbc.com/fr

http://www.assetmanagement.hsbc.com/ch

eurozone equities: a bull market driven by smaller caps? · 2 contents non contractual document...

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