Weekly Markets

Perspectives

For important disclosures, refer to the Disclosure Section, located at the end of this report.

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Quote of the week

Turning to the potential costs of the Federal Reserve's asset

purchases, there are some that definitely need to be monitored

over time. At this stage, I do not see any that would cause me to

advocate a curtailment of our purchase program

Fed Vice Chair Janet Yellens remarks at The National Association for

Business Economics, March 4th, 2013

Quote of the week 2

S&P 500 had the biggest weekly rally since January, with all

10 industry groups showing gains in the week. The index was

supported by further signs that the Federal Reserve will not

slow (at least for now) the pace of its monthly purchases, and

by a better-than-expected US employment report. The 236k

increase in February nonfarm payrolls was well above market

expectations, as the job market registered broad-based gains.

The S&P 500 index is now less than one percent below its all-

time record high. Meanwhile, Treasuries suffered in this risk-

on environment. The 10-year yield finished the week above

the 2% mark. Nevertheless, the hit from sequestration still lies

ahead, and is likely to put a damper on the pace of economic

activity in Q2.

The ECB left rates on hold at its March meeting, but the

Council discussed a rate cut, signalling a bias in that

discussion. Like in February, Draghi left the clear message that

the monetary policy stance is and will remain accomodative

as long as is needed. Despite the downward revisions to the

staff GDP forecasts, the ECB maintained the assumption of

economic recovery this year.

The Stoxx Europe 600 gained 2.3% this past week. The index

closed at the highest level since June 2008. The European

benchmark is now up 5.7% so far this year.

Executive Summary

Spains 10-year yields dropped to the lowest level in

more than two years. Portugals 10-year bonds also had

their biggest weelkly gain in two months, helped by

Standard & Poors announcement that the rating agency

raised the nations credit-rating outlook to Stable from

Negative. The Portuguese equity benchmark PSI20 rose

2.3% during the week, with BES up by more than 9%.

Meanwhile, Italys credit rating was cut by Fitch Ratings

to BBB+ from A-. The outlook is negative. The downgrade

reflects the inconclusive results of the Italian

parliamentary elections and the ongoing economic

recession. The gross general government debt is expected

to peak in 2013 at close to 130% of GDP.

The policy focus this week will be the EU summit on 14th

and 15th of March in Brussels. The theme will be the

European Semester, the annual pan-European policy

coordination cycle. However, concrete takeways are likely

to be limited.

The Fed will release on Thursday its Comprehensive

Capital Analysis and Review, which will evaluate the

banks ability to make capital distributions such as

dividend payments and stock repurchases.

Executive Summary 3

Eurozone: Final February PMI

remained stuck below 50 The final Euro area Composite PMI for February came

in at 47.9, above the flash reading and consensus

expectations, but below the January print (48.6);

The improvement was driven by better final

manufacturing and services PMIs relative to the flash,

in both Germany and France;

The country breakdown showed that Composite PMIs

indices deteriorated in Germany, Italy and Spain during

February. In Italy, the decline was broad-based across

the industry and service sectors;

Activity in France improved in February, after having

departed from that in Germany in recent months.

Eurozone: Retail sales starts 2013 on a

positive note

Euro area retail sales began 2013 on a positive note.

Retail sales in the region increased by 1.2% m/m, more

than offsetting Decembers 0.8% m/m drop;

After declines or slight improvements in December,

almost all countries showed a rebound in January.

Germany led the way, with a 3.1% m/m rise;

Should we look for an improvement in private

consumption in Q1 2013?

Source: Bloomberg, Fincor

Economics - Europe

Source: Eurostat, Fincor

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Eurozone: Eurogroup / ECOFIN

meetings Review The Eurogroup has taken into consideration the

request made by Ireland and Portugal to extend the

maturities of their bailout loans. A final decision is

expected to be taken in April. Ireland is asking for an

extension of 15 years, compared with the current

schedule which sees the shortest loans come to

maturity in 2015. The current average maturity of the

Irish and Portuguese EFSF and EFSM bailout loans has

already been lengthened once from the original 7.5

years to around 13 years;

Greece has met the MoU milestone for February. The

country will now receive the next disbursement of

2.8bn;

Cyprus has agreed to an independent evaluation of

money laundering practices. However, no progress has

been made on the extent of state-asset privatizations

and the restructuring of the domestic banking sector,

two important hurdles preventing a bailout

agreement. Meanwhile, according to the new Cypriot

Finance Minister, Cyprus banks have already suffered

substantial outflows from depositors;

Eurogroup confirmed that the Spanish banking

programme remains on track.

Spain: Higher unemployment lower

consumer confidence

Spanish unemployment increased by 59,400 (+1.2%

m/m) in February, lower than the consensus forecast

(+75,000);

According to the National Statistics Institute survey,

there were almost 6 million people (registered and non-

registered) out of work in Spain at the end of 2012;

Consumer confidence is reported to have dropped by 5

points in February according to the Spanish Sociological

Research Centre. This seems to highlight the pessimism

felt by most Spaniards due to the steady uptrend seen in

unemployment.

Source: Spanish Labour Ministry, Fincor

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Spain Registered Unemployment

(m/m, 000s)

Economics - Europe 5

Germany: Wages continue to rise In the steel industry (in North-West Germany), IG Metall

agreed on a wage increase of 3% for a 15-month period.

A similar deal was concluded in part of the

wood/plastics sector (but covering 16 months).

Moreover, doctors association Marburger Bund and

municipality-owned hospitals agreed to a pay increase

of 2.6% from January 2013 and another 2.0% increase

for January 2014. Over the coming months, around 80

separate deals covering 12.5 million workers will be

negotiated;

The Bundesbank expects that negotiated wages will

increase by 2.7% y/y in 2013. Investors remain focused

on German wages as a driver of domestic demand and

as a part of the needed rebalancing in the Euro area.

Germany: German factory orders

signal some downside risk to

industrial production in the near-term January headline factory orders dropped by 1.9% m/m.

Core orders, that exclude volatile large transportation

equipment orders, fell by 3.0% m/m;

The weakness in capital goods orders mainly came from

abroad, with total domestic orders doing somewhat

better. Overseas capital goods orders decreased 3.7%

m/m, while orders from other euro area members fell

by 2.2% m/m;

German factory orders had a poor start into 2013.

Nevertheless, recent business surveys point towards a

better outlook.

Source: Deutsche Bundesbank

Economics - Europe 6

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Germany Factory Order Volumes (% m/m)

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German Negotiated Wages

(hourly basis, % y/y)

Source: Deutsche Bundesbank

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France Government Budget Balance (% of GDP)

France: 2014 budget plans to require

additional savings A poll for Les Echos revealed that President Hollande

and Prime Ministers popularity have registered in

March the second largest monthly fall since the election

in May 2012;

The February survey of business confidence conducted

by the Central Bank of France showed a one-point gain

in the industrial sector, while that for services fell by two

points. The Bank expects Q1 GDP to grow by 0.1% q/q;

French Budget Minister announced that French

government ministers will be asked to find an additional

4bn in cost cuts in 2014, on top of the 10bn already

programmed. According to the French Finance Minister,

France will miss the 3% budget deficit target in 2013.

The local government doesnt want to deepen austerity

at a time of stagnation.

Germany: Industrial production

unchanged in January January industrial production remained at its December

level, +0.0% m/m vs. consensus +0.4% m/m, but the

December print was revised up from 0.3% m/m to 0.6%

m/m;

Manufacturing activity, excluding construction and

energy production, declined by 0.2% m/m. Construction

was the bright spot, up by 3% m/m. The production of

consumer good increased by 1.6% m/m;

Despite some weaker data for January, recent business

surveys suggest Germanys economy has reached a

turning point.

Source: Ernst & Young, Fincor

Economics - Europe 7

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Jan-11 Mai-11 Set-11 Jan-12 Mai-12 Set-12 Jan-13

Germany Industrial Production (% y/y)

Source: Bundesbank, Fincor

ECB and BOEs MPC hold policy unchanged At the conference call, there was less focus on the

exchange rate. However, Mr. Draghi reiterated that the

exchange rate was important for growth and price

stability;

The statement released by the ECB identifies the

implementation of structural reforms as essential to

support the economy;

Regarding the possibility of additional non-

conventional measures, Mr. Draghi said that on

credit and fragmentation we are not committing or

planning anything special. The ECB sees a steady

reduction in the fragmentation of financial markets

and the banking system;

The Bank of Englands Monetary Policy Committee left

policy unchanged, with Bank rate held at 0.5% and the

stock of asset purchases at 375bn. No material

statement was released alongside the announcement.

The ECB left rates on hold at its March meting. There were

no hint of further non-conventional measures;

The Governing Council is still expecting a gradual

recovery in the economy, although the risks to the outlook

remain to the downside;

The updated staff projections now point to a 0.5% real

GDP contraction in 2013 (-0.3% previously). The economy

is expected to grow by 1.0% next year;

The Governing Council sees the risks to the inflation

outlook as still broadly balanced over the medium term;

The possibility of a rate cut has been discussed, according

to Mr. Draghi, but the prevailing consensus was to leave

rates unchanged. Moreover, he mentioned that a cut to

the deposit rate could have serious unintended

consequences;

Economics - Europe 8

ECB staff macroeconomic projections for the euro area (%)

Dec '12 Mar '13 Dec '12 Mar '13 Dec '12 Mar '13

HICP 2.5 / 2.5 2.5 1.1 / 2.1 1.2 / 2.0 0.6 / 2.2 0.6 / 2.0

Real GDP -0.6 / -0.4 -0.5 -0.9 / 0.3 -0.9 / -0.1 0.2 / 2.2 0.0 - 2.0

Private consumption -1.2 / -1.0 -1.2 -1.1 / -0.1 -1.3 / -0.3 -0.4 / 1.4 -0.3 / 1.5

Government consumption -0.6 / -0.2 0.0 -1.2 / 0.0 -0.9 / -0.1 -0.4 / 1.2 -0.4/ 1.2

Gross fixed capital formation -4.2 / -3.4 -4.0 -4.2 / -1.0 -3.8 / -1.0 -1.0 / 3.6 -0.9 / -3.5

Exports 2.1 / 3.7 2.9 -0.4 / 5.0 -1.3 / -3.5 2.0 / 8.6 0.8 / 7.8

Imports -1.1 / 0.3 -0.7 -1.7 / 3.7 -2.1 / -2.3 1.7 / 7.7 1.0 - 7.2

Source: European Central Bank

2012 2013 2014

Portugal: Industry turnover is still

contracting In nominal terms, the industry turnover index for

Portugal dropped by 4.7% y/y in January (vs. 6.8% y/y

in December). The slight improvement of the headline

index is explained by the behavior of the external

market index, which moved from -7.6% y/y in

December to -2.0% y/y. The domestic market index

was almost unchanged in February, down 6.6% y/y,

following -6.3% in the previous month;

Employment, wages and hours worked (adjusted for

calendar effects) in the sector fell by 4.0% y/y, 4.7%

y/y and 3.7%, respectively.

Portugal: S&Ps revises outlook to

stable. BB rating reaffirmed Standard & Poors believes that the EFSF and the EFSM

are likely to extend their loans, thereby reducing the

Portuguese governments refinancing risks;

Moreover, the Troika is expected to adjust Portugals fiscal

consolidation path under the programme, which would

make the adjustment process more sustainable, according

to S&P;

Portugals GDP is expected to contract by 1.5% in 2013,

before returning to modest growth in 2014 and 2015. The

general government deficit is expected to be around 5% in

2013, compared with 6.1% in 2012, excluding one-off

items;

S&P mentions that Portugal has one of the highest

external debt net of liquid assets of all rated sovereigns

(at around 300% of current account receipts).

Nevertheless, the rating agency expects a current account

surplus position in 2013 for the first time since 1994.

Source: Statistical Office of Portugal, Fincor

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Portugal Industry Turnover Index (y/y %)

Economics - Europe 9

Portugal Sovereign Ratings

Rating agency Rating Outlook

Moody's Ba3 Negative

S&P's BB Stable

Fitch BB+ Negative

Source: Fincor

US: ISM Non-manufacturing above

expectations in February The ISM Non-manufacturing index increased to 56 in

February, above consensus forecast of 55;

The forward-looking new orders component was up to

58.2, while the employment component ticked down

slightly to 57.2 (but still comfortably in the expansion

territory);

The Beige Book continued to describe activity expanding at

a modest or moderate pace. The consumer sector

activity reportedly held up well despite the large tax

increase at the start of the year. Auto sales were

mentioned to be supported by pent-up demand. Home

construction increased in most Districts and home prices

edged higher in the majority of districts.

US: February nonfarm payrolls was

well above market expectations The February increase in nonfarm payrolls was better-

than-expected at 236k (vs. consensus of +165k).

Cumulative revisions to prior months were -15k. Job

gains were particularly robust in construction (+48k);

The February report points to a gradually improving

trend. Given the upward revisions included in the

annual benchmark, the 3-, 6-, and 12-month averages

stand at 191k, 187k and 164k;

The unemployment rate dropped to 7.7% (vs.

consensus of 7.9%). Nevertheless, the labour force

participation rate declined by 0.1pp to 63.5%.

Source: ISM Institute, Fincor Source: U.S. Bureau of Labour Statistics, Fincor

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US ISM Non-manufacturing and GDP

ISM Non-manufacturing Index (LHS)

Real GDP (y/y %, RHS)

Economics - US 10

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US Change in Nonfarm Payrolls (000's)

Last

3 Months MA

Japan: Kuroda reconfirmed his

commitment to achieving 2%

inflation The governments nominee for the next BoJ governor

gave at the beginning of last week testimony at the

Steering Committee of the Lower House;

He considered that the BoJ has not done enough to

achieve a 2% inflation target;

The BoJ should be accountable for achieving the

inflation target. This target needs to be achieved in

approximately two years;

Haruhiko Kuroda mentioned that the BoJ should not

purchase foreign bonds and that the BoJs

underwriting of JGBs is strictly prohibited by the law;

He emphasized the importance of extending the JGB

maturity (to equal to or more than 5 years) and

purchasing risk assets (corporate bonds and ETFs

were mentioned);

Both Houses are expected to approve Kuroda as the

next BoJ governor.

Japan: Growth close to 0%. Market

expects recovery from Jan-Mar 2013 As was expected by market participants, the Bank of Japan

decided not to change monetary policy at its policy meeting

on March 6th-7th. The next policy meeting scheduled to April

3rd-4th is expected to be conducted under the new governor

and deputy governors;

The economic assessment was upgraded to has stopped

weakening from the previous appears to stop

weakening;

Oct-Dec 2012 real GDP growth was revised up to +0.2% q/q

annualized from the preliminary figure of -0.4%;

The January non-adjusted current account balance came in

at a deficit for a third consecutive month. A large trade

deficit is the major cause. However, in January, exports grew

(+6.4% y/y) for the first time in eight months.

Source: Economic and Social Research Institute of Japan, Fincor

Economics - Asia 11

China: Government keeps 2013 real

GDP growth target at 7.5% Chinas top leaders met at the annual Peoples Congress;

Premier Wens final work showed that China has kept its

2013 GDP growth target unchanged at 7.5%;

Inflation is targeted at 3.5% for 2013;

Chinas 2013 budget deficit is planed at about 2% of

GDP, and will include a 10.7% spending increase in the

militarys budget;

Meanwhile, the Chinese government announced new

measures to control real estate speculation, which

includes raising the down payment ratio and mortgage

rates for second homes in localities with excessive

property speculation and a 20% profit tax on price

differentials between selling price and purchase prices

on homes. The government is expected to release more

details over the coming days;

A PBoC deputy Governor said that the country is fully

prepared for a currency war.

China: Jan-Feb IP and retail sales

weaker than expected. Inflation

above expectations CPI rose more than expected in February (3.2% y/y vs.

consensus 3.0% y/y). Both food and non-food CPI were

higher than expected. Will this upside surprise lead to a

tighter policy stance?

Industrial production rose 9.9% y/y in January and

February (consensus 10.3%);

Nominal retail sales increased by 12.3% y/y in January

and February (consensus 15.2% y/y). Does this weak

activity data suggest that the overall policy environment

has become less supportive?

Fixed asset investment presented a January and

February year-to-date growth of 21.2% y/y (consensus

20.7% y/y), which suggests robust investment demand.

Economics Emerging Markets 12

China Activity and Inflation Indicators - Data Summary (%, y/y)

Feb-13 Jan-13 Dec-12 Nov-12 Oct-12 Sep-12 Aug-12 Jul-12

Industrial Production 9.9 9.9 10.3 10.1 9.6 9.2 8.9 9.2

Nominal Retail Sales 12.3 12.3 15.2 14.9 14.5 14.2 13.2 13.1

Real Retail Sales 9.5 9.5 13.5 13.6 13.5 13.2 12.1 12.2

Nominal FAI 21.2 21.2 19.9 20.7 22.2 22.2 19.0 20.4

CPI 3.2 2.0 2.5 2.0 1.7 1.9 2.0 1.8

PPI -1.6 -1.6 -1.9 -2.2 -2.8 -3.6 -3.5 -2.9

Source: NBS, CEIC, Fincor

The Portuguese Stock Index rose 2.3% during last week;

Altri rose 6%. The company released its Q4 2012 results. Revenues

increased by 19% y/y, supported by strong volumes (227k tonnes sold),

which offset lower selling prices in the quarter. EBITDA margin improved

by 7.2pp to 26.5%. Net profit reached 12.5mn. Net debt went down by

59mn y/y to 620mn. The company has been able to reduce debt by

c.190mn over the last 3 years;

Cofina increased 3.8%. The company released its Q4 2012 results last

week. Revenues reached 27.7mn (-14% y/y) and were impacted by lower

revenues from newspapers. EBITDA margin improved from 16.6% in Q4

2011 to 18.8%, reflecting strong cost control (operating costs were down

16% y/y). Cofina continues to be able to offset a weak advertising market

through a remarkable management in the costs side. Cofina ia about to

launch its Correio da Manh TV on the 19th of March;

Galp rose 3.8%. The company informed about the results from the well 3-

BRSA-1132-RJS (Iara West-2), located in the Iara evaluation area, in the

pre-salt of Santos Basin (Galp has a 10% stake). This is the fourth well

drilled in the Iara area. Results proved the presence of oil;

ZON fell 1%. The Board of Directors of both ZON and Sonaecom have

approved the merger between ZON and Optimus. ZONs Board of

Directors also approved the increase of its registered share capital from

3,090,968.28 to 5,151,613.80, through the issuance of 206,064,552

new shares at the nominal value of 0.01 each, as well as the change of

the corporate name to ZON OPTIMUS, S.A.

PSI20 Weekly Review

Source: Bloomberg

Economics - EuropeMarkets Portugal 13

The Spanish Equity Market Index IBEX35 increased 5.4% during last week;

Telefonica increased 11%. Telefonica and Claro signed a MoU to build 3G

and 4G networks sharing plan during the next three years. The two

companies wants to optimize investment, operation, and maintenance of

its networks. This is expected to reduce significantly capex requirements;

Repsol rose 7.2%. Argentinean press reports stated that the country is

close to reach an agreement with Repsol over compensation for the

expropriation of YPF. Sources at Repsol once again denied any ongoing

negotiations;

Acciona was up 6.2%. The company will open a turbine-hub assembly

plant in Brazil, as Acciona seeks to comply with the countrys local-content

requirements for wind-power equipment;

BBVA rose 5.4%, while Banco Popular increased 5.6% during the week.

The IMF urged Spanish officials to force banks to restrict bonuses and cash

dividends, if those measures are needed to increase the strengh of the

financial system;

Grifols rose 0.9% during the week, but underperformed the Spanish

index. According to press reports, the company has signed a supply

agreement with Cadence Pharmaceuticals for the development,

manufacture, and supply of OFIRMEV injection in flexible plastic bags;

Abengoa rose 1.4%. The company has been awarded by the Mexicos

Federal Electricity Commission a contract worth US$54mn for the

engineering, construction and start-up of an electricity transmission

project in the country.

IBEX35 Weekly Review

Source: Bloomberg

Economics - EuropeMarkets Spain 14

The Fed released last week its latest banking stress stest results, which

concluded that 17 out of 18 bank holding companies will have a projected

tier 1 common ratio above the minimum 5% under a severaly adverse

scenario (a GDP decline of 5%, unemployment at 12%, equity prices down

by 50%, and real estate down by 20%). Meanwhile, Citigroup asked the

Federal Reserve permission to buy back US$ 1.2bn of shares, without

seeking a dividend increase, a year after its previous request was rejected.

The stock rose 12.7% during the week;

The DJ Europe 600 index gained 2.3%, closing the week at the highest level

since June 2008. The benchmark is now up 5.7% so far this year;

Vodafone rose 9.5% this past week. Press reports suggest that Verizon is

working to resolve its relationship with Vodafone, although no formal

discussions are currently under way. According to the same article, the two

companies have explored a variety of options over, including a full merger

and a partial sale;

On March 5th, Petrobras has unexpectedly announced a 5% increase in

diesel prices. The Federal governments decision to increase diesel prices

was strongly positive for investor sentiment, and demonstrate that the

government is concerned regarding the companys ability to execute its

huge 2012-2016 capex plan. The stock rose by 16.4% during last week,

reflecting lower concerns rearding a possible future equity offering and a

lower probability of a dividend cut;

McDonalds rose 3.2%. The company reported February global SSS of -1.5%,

roughly in line with the -1.6% consensus. March (8%) is expected to be

another mouth of tough comparables.

Last weeks European and US equity market highlights

Source: Bloomberg

Markets US and Europe 15

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Citigroup Daily Stock Price Changes (%)

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Petrobras Daily Stock Price Changes (%)

What we are watching this week:

This week in Europe, final HICP figures will be

released for the euro area countries, with the figure

for the bloc itself due out on Friday;

The key policy focus will be the EU summit at the

end of this week. However, no major policy

innovations are expected;

In the US, the NFIB Small Business Survey is due on

Tuesday (at 12:30 GMT). After a sharp drop in Q4

2012, the NFIB small business optimism index

recovered in January. Will the February report show

further improvement?

In Asia, the India WPI Inflation should be released

on Thursday. It has surprised on the downside for

four consecutive months. The industrial production

number for the country will be out on Tuesday.

Improving inflation and disappointing activity

numbers could push the RBI to a rate cut at its March

19th meeting;

The Bank of Korea is likely to keep monetary policy

on hold at its March 14th meeting, despite the latest

CPI numbers showing that headline inflation is

running well below the central banks target range,

Finally, this week sees the latest update on credit

conditions in China, with the release of total social

financing numbers for February.

Economics - EuropeThe Week Ahead 16

Event Date Hour Survey Prior

Trade Balance, Germany 11-Mar 07:00 14.4B 12.0B

Imports SA m/m, Germany 11-Mar 07:00 0.7% -1.3%

Exports SA m/m, Germany 11-Mar 07:00 0.5% 0.3%

Industrial Production m/m, France 11-Mar 07:45 -0.2% -0.1%

BoJ Minutes for February Meeting 11-Mar 23:50 n.a. n.a.

GDP sa and wda q/q, Italy 11-Mar 09:00 -0.9% -0.9%

GDP q/q, Portugal 11-Mar 11:00 n.a. -1.8%

CPI y/y, India 12-Mar n.a. 10.6% 10.8%

Industrial Production y/y, India 12-Mar 05:30 1.0% -0.6%

Consumer Price Index m/m, Germany 12-Mar 07:00 0.6% 0.6%

Industrial Production m/m, UK 12-Mar 09:30 0.1% 1.1%

Industrial Production m/m, Mexico 12-Mar 14:00 -1.1% -2.1%

Unemployment Rate (SA), South Korea 12-Mar 23:00 3.2% 3.2%

US House Budget Committee announce 2014 Budget Proposal 12-Mar n.a. n.a. n.a.

Consumer Price Index m/m, France 13-Mar 07:45 0.5% -0.5%

Consumer Price Index m/m, Spain 13-Mar 08:00 0.1% -1.3%

Euro-Zone Ind. Prod. sa m/m, Euro-Zone 13-Mar 10:00 0.0% 0.7%

Advance Retail Sales, US 13-Mar 12:30 0.5% 0.1%

Retail Sales Less Autos, US 13-Mar 12:30 0.5% 0.2%

Unemployment Rate, Australia 14-Mar 00:30 5.5% 5.4%

South Korea 7-Day Repo Rate 14-Mar 01:00 2.75% 2.75%

Industrial Production m/m, Japan 14-Mar 04:30 n.a. 1.0%

Retail Sales (Real) y/y, Spain 14-Mar 08:00 n.a. -10.2%

SNB rate announcement 14-Mar 08:30 n.a. n.a.

ECB Publishes Monthly Report, Euro-Zone 14-Mar 09:00 n.a. n.a.

Current Account Balance, US 14-Mar 12:30 -$112.8B -$107.5B

Producer Price Index m/m, US 14-Mar 12:30 0.6% 0.2%

PPI Ex Food & Energy m/m, US 14-Mar 12:30 0.1% 0.2%

Initial Jobless Claims, US 14-Mar 12:30 n.a. 340K

Norges bank rate annoucement 14-Mar 13:00 n.a. n.a.

Bank of England releases 2013 Q1 Quarterly Bulletin 14-Mar n.a. n.a. n.a.

EU Leaders begin 2 days summit in Brussels 14-Mar n.a. n.a. n.a.

General Government Debt, Italy 15-Mar 09:30 n.a. 1,988.4B

Euro-Zone CPI m/m, Euro-Zone 15-Mar 10:00 0.4% -1.0%

Empire Manufacturing, US 15-Mar 12:30 8.0 10.0

Consumer Price Index m/m, US 15-Mar 12:30 0.4% 0.0%

CPI Ex Food & Energy m/m, US 15-Mar 12:30 0.2% 0.3%

Industrial Production, US 15-Mar 13:15 0.3% -0.1%

Capacity Utilization, US 15-Mar 13:15 79.3% 79.1%

U. of Michigan Confidence, US 15-Mar 13:15 78.0 77.6

Source: Bloomberg

The Week Ahead: Economics

US Retail sales should be released on Wednesday (at 13:30 GMT). Higher

payroll taxes are expected to have limited household purchasing power.

Market consensus expects a solid 0.5% m/m gain in nominal headline

spending, which should reflect higher gasoline prices during the month of

February;

Surging gas prices are also expected to impact the February CPI print (due

Friday at 13:30 GMT). Consensus expects a 0.4% m/m rise, following 0.0%

m/m in January. Core price inflation is expected to show a more modest

increase (+0.2% m/m);

The University of Michigan measure of consumer sentiment is due on

Friday (at 14:55 GMT). The reported strength in the labour market and a

rising stock market is likely to have supported consumer sentiment in

early March, despite higher gasoline prices;

The N.Y. Fed Empire State manufacturing survey (at 13:30 GMT) and

Industrial Production (14:15 GMT) should both be released on Friday.

Consensus forecasts a healthy gain in industrial production in February

(+0.3% m/m);

Final Italian Q4 GDP data is due today. No revisions from its flash estimate

of -0.9% q/q (-2.7% y/y) are expected. French industrial production for

January is also due this morning, and is likely to show another m/m fall;

The final inflation number for Germany is due on Tuesday, and is likely to

remain unchanged from its flash estimate;

Industrial production for the Euro zone and the French inflation data will

both be released on Wednesday.Source: Bloomberg

Economics - EuropeThe Week Ahead 17

-3

-2

-1

0

1

2

3

4

5

6

00 01 02 03 04 05 06 07 08 09 10 11 12 13

US CPI Inflation (y/y %)

Headline Index

Core Inflation

-40

-30

-20

-10

0

10

20

30

40

08 09 10 11 12 13

N.Y. Fed "Empire Manufacturing" Survey

-20

-15

-10

-5

0

5

10

00 01 02 03 04 05 06 07 08 09 10 11 12 13

France Industrial Production Index (y/y %)

The Week Ahead: EU Summit in Brussels and Earnings Season in Iberia

Economics - EuropeThe Week Ahead

The quarterly leaders meeting will take place as usual in

Brussels;

European leaders are expected to discuss the growth

strategy to incorporate in their Stability and Growth

Programme;

Market doesnt expect any concrete policy decision.

European leaders will probably reaffirm the need to get

to the right balance between fiscal consolidation and

growth;

European leaders will likely also highlight the need to

carry on with structural reforms in order to reduce

unemployment and improve government budget

balance;

The first phase of the 2013 European Semester, which

coordinates member state economic, fiscal and

employment policies will be completed;

Progress against the 2012 targets will be assessed and

guidance given to member states on the 2013 Stability

and Convergence Programmes and the Europe 2020

flagship initiatives.

EU Summit to be held on Thursday

and Friday (14th and 15th)

Sonae and Inditex to report earnings

on Wednesday

Sonae is expected to announce its FY2012 results

Wednesday (March 13th) before market opening. A

conference call will be held on the same day at 16:00

UK/Portuguese time;

The numbers of Sonaecom and Sonae Sierra have

already been reported. For that reason, the main focus

will be on the margins delivered by the Food Retail

division. The company has already disclosed a -3.7% LfL

sales evolution in Q4 2012. The Non-Food business is

expected to remain constrained by the weak macro

backdrop;

Inditex reports results on Wednesday before market

open. A conference call will be held on the same day at

8:00 UK/Portuguese time;

Investors will probably focus on LfL sales growth in Q4

2012, given a tough macro outlook in Europe. The

company is also expected to provide an update on sales

evolution in the first weeks of 2013.

18

The Week Ahead: European coporate events and weekly supply monitor

Economics - EuropeThe Week Ahead

Enel will present its 2013-2017 Strategic Plan, which is

expected to address its outlook for earnings and

dividends.

Enel and ENI will hold their Strategy

Day

Weekly supply outlook

This weeks supply in Europe comes from the

Netherlands, Germany and Italy;

In the US, the Treasury will issue 66bn across the 3-,

10- and 30-yr sectors;

In the UK, 1.5bn of a conventional gilt will be issued

this week.

19

Corporate Events in Europe

Company Event Sector

Monday, 11 March 2013

Pirelli FY results Auto Parts & Tires

Tuesday, 12 March 2013

Enel FY results Electric Utilities

Munich Re Release of the full balance sheet and P&L Insurance

Intesa SanPaolo Q4 results Banks

Lafarge Shareholders Meeting Building Materials

Antofagasta FY results Mining & Metals

Geberit FY results Building Materials

Galenica FY results Retail

Air-France Traffic Statistics Airlines

Computercenter FY results Technology Services

Wednesday, 13 March 2013

Prudential FY results Insurance

Enel Strategy Day Electric Utilities

E.ON FY results Electric Utilities

Snam Strategy Day Gas Utilities

Adecco Q4 results General Industrial Services

G4S FY results General Industrial Services

Thursday, 14 March 2013

Volkswagen FY results Automobile Manufacturers

Eni Strategy Day Energy

BBVA AGM Banks

Morrison Preliminary results Food Retailers

Lufthansa FY results Airlines

Gemalto Q4 Results Communications Technology

Boskalis FY results General Industrial Services

SGL Carbon FY results Industrial, Diversified

Wacker Chemie FY results Chemicals

Friday, 15 March 2013

H&M February Sales Retail

Unicredit Q4 results Banks

ArcelorMittal Investor Day Mining & Metals

Terna FY results Electric Utilities

Rentokil FY results General Industrial Services

Source: Fincor

This week's Selected Bonds and T-Bills Supply

Issue Country Date Amount (bn) Hour (GMT)

6-month TB Germany 11-Mar 4bn 10:30

3-, 6- and 12-month TB France 11-Mar 7.8bn 13:50

6- and 12-month TB Spain 12-Mar n.a. 09:30

12M TB Italy 12-Mar 7.75bn 10:00

Bundei 2023 reopening Germany 12-Mar 1bn 10:30

DSL Apr 2016 Netherlands 12-Mar 2.5-3.5bn

3-year US 12-Mar $32bn

Schatz Mar 2015 reopening Germany 13-Mar 5bn 10:30

BTP 2-, 4-, 5- and 15-year Italy 13-Mar 5.5bn 10:00

Gilt 3.75% 2052 UK 13-Mar 1.5bn

10-year US 13-Mar $21bn

30-year US 14-Mar $13bn

Source: Treasuries; Fincor

The Week Ahead: Political situation in Italy and Idea of the week

Economics - EuropeThe Week Ahead

According to the Italian Constitution, the first

session of the new Parliament has to occur within

20 days of the elections. In the current case, this

would point to March 17th, which is a Sunday. The

political situation remains complex. The leader of

the 5SM said that his movement will not support

a centre-left minority government. The President

of the Republic stated that he will not resign

before the end of his mandate (May 15th);

Investors will watch closely the election of the

presidents of the two houses, particularly that in

the Senate. The President in the Senate is the

second highest institutional office in Italy. That

should occur on March 15th or March 18th;

Given the huge debt stock of 127% of GDP, the

debt-sustainability of Italy can quickly be

questioned again by markets. Hence, it will be

interesting to watch market reaction (if any) to

Fitch Ratings decison to downgrade Italys long-

term foreign and currency issuer default ratings to

BBB+ from A- (outlook negative). The rating

agency considers that a weaker government could

be slower and less able to respond to domestic

and external economic factors.

Political situation in Italy Idea of the week: Indra Indra is Spains leading IT services provider. Formerly a

government-owned company, it has exposure to defense and

public administration contracts. However, the company has

been increasing its exposure to international markets,

particularly to emerging markets. FY 2012 results came in line

with expectations. The severe weakness in Spain continued in

Q4 2012 with revenues down by 22% y/y, after -24% y/y in Q3

2012. However, the international business was up 25% in 2012

pre M&A (vs. -18% in Spain);

The cautious outlook has recently weighed on shares.

Following the expansion of balance sheet of the past few years,

the company announced that managing the balance sheet will

20

now be its priority.

Hence, the company

could selectively divest

in some areas and it

intends to maintain

dividend policy without

increasing financial

leverage (Net debt /

Ebitda 2.1x at 2012 year-

end).

Charts we are watching

Source: Bloomberg

Source: Bloomberg

On Tuesday, the DOW closed at its record high, breaking above the

previous high seen on September 10th 2007, and continued to mark

new highs during the rest of the week. The S&P 500 ended the past

week less than 1% away from its record close, which it reached on

October 9th, 2007. The index is now up 8.8% since de end of 2012.

Despite subdued expectations for growth at the beginning of 2013 due

to the significant tightening the economy had to absorb, US equity

indices have nonetheless been supported by the resilience showed by

the economy, helped by the sizable monetary easing put in place by the

Fed. Meanwhile, in Europe, the DAX is only -1.5% from its peak (July

2007). Peripheral Europe is faring much worse. Portugal, Spain and Italy

are now 59%, 45.9%, and 67.7% from their historical highs. Finally, the

CAC 40 is not doing much better, with the French index being 44.5%

below its peak in September 2000.

Altri reported the past week Q4 2012 results that surpassed market

expectations. The company has been able to reduce debt (net debt /

Ebitda at 4.3x remains high, however), as well as to increase its efficiency

and profitability (through cost cutting). Altri remains a leveraged player

on pulp price momentum. Pulp prices have been on a rising trend in

2013, even more noticeable in Euro-based prices, reflecting the

weakening of the Euro area currency. Altri has started to outperform

Portucel. Portucel is mainly exposed to the UWF paper market, which has

been soft so far this year, with the BEKP representing only a small share

of the companys total revenues. It seems that the cycle is, at least for

now, on the side of Altri.

-75

-65

-55

-45

-35

-25

-15

-5

5

PSI 20 CAC 40 DAX IBEX 35 FTSEMIB Bovespa S&P 500 DJIA Shanghai

Composite

% above (below) previous historical highs

95

100

105

110

115

120

125

130

Dez-12 Jan-13 Fev-13

Portucel and Altri Relative Performance

Altri

Portucel

Dec 31, 2012 = 100

Charts we are watching 21

Disclosure Section

This research report is based on information obtained from sources which we believe to be credible and reliable, but is

not guaranteed as to accuracy or completeness. All the information contained herein is based upon information

available to the public.

The recipient of this report must make its own independent assessment and decisions regarding any securities or

financial instruments mentioned herein.

This report is not, and should not be construed as an offer or a solicitation to buy or sell any securities or related

financial instruments. The investment discussed or recommended in this report may be unsuitable for investors

depending on their specific investment objectives and financial position.

The material in this research report is general information intended for recipients who understand the risks associated

with investment. It does not take account of whether an investment, course of action, or associated risks are suitable

for the recipient.

Investors should seek financial advice regarding the appropriateness of investing in any securities or investment

strategies discussed or recommended in this research report and should understand that the statements regarding

future prospects may not be realized. Investors may receive back less than initially invested. Past performance is not a

guarantee for future performance.

Fincor Sociedade Corretora, S.A. accepts no liability of any type for any indirect or direct loss arising from the use of

this research report.

Recommendations and opinions expressed are our current opinions as of the date referred on this research report.

Current recommendations or opinions are subject to change as they depend on the evolution of the company or may

become outdated as a consequence of changes in the environment.

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