Emerging Markets Research
EEMEA
20 July 2017
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES STARTING AFTER PAGE 7
South Africa Morning Sheet
Although there is more uncertainty about the MPC’s stance than usual, we expect
it to leave rates unchanged. However, we expect the vote split or text of the
statement to turn more dovish
At Eskom’s release of its annual financials yesterday, the market’s focus on
governance issues overshadowed a reasonable set of numbers, in our view
Headline CPI inflation eases in June on lower fuel prices
May retail sales provide a welcome upside surprise
Fitch releases analysis that suggests the government’s Inclusive Growth Action
Plan, released last week, is unlikely to change South Africa’s growth trajectory;
we agree
The SARB MPC is due to announce its decision on rates today at 15:00 SA time. We
note a higher level of uncertainty than usual about the MPC’s likely stance, given the
sharp contraction in Q1 GDP growth and the recent deceleration in core CPI inflation.
Nonetheless, we side with the majority of economists (24 out of 27 polled by Reuters)
in forecasting that the SARB will likely stay on hold at 7%. However, we note that recent
activity indicators (May prints for mining and manufacturing output and for retail sales)
have all been much stronger than expected, offering reassurance that overall GDP
growth in Q2 will be positive; in fact, we see considerable upside risk to our forecast of
0.6% q/q saar. Although they are not usually a focus of the market, today’s wholesale
sales and motor vehicle trade data also may be scrutinized by the MPC for their
messages about consumption demand. Although we expect the MPC to stay on hold,
we would not be at all surprised to see a more divided vote, say 4:2, instead of the 5:1
vote that prevailed at the two previous meetings, and we would be surprised if the
statement does not sound more dovish than previously.
Yesterday Eskom SOC Holdings (Eskom) released its annual financial statements for
the year to March 2017. A focus on governance issues given the reported irregularities
highlighted by external auditors overshadowed the numbers, in our view. Liquid assets
were reported at ZAR32.5bn down from FY 16’s ZAR38.7bn, but debt service cover
(1.37x) and gross debt/EBITDA ratios (10.8x) showed improvement. Management also
confirmed that no covenants on loans have been breached and that Eskom has not
applied for any additional government guarantees (or other bailouts). There was no
further information on what Finance Minister Gigaba meant when he said he was
examining further soft support for Eskom as part of the growth action plan. Questions
during the Q&A focused on the irregularities. Acting CEO, Johnny Dladla, confirmed that
the board is pursuing disciplinary action against former acting CEO Matshela Koko.
Questions were also raised regarding a payment to Trillian, a subcontractor to
consulting firm McKinsey and Co (which has currently been suspended by Eskom).
June CPI headline inflation fell to 5.1% y/y from 5.4% in May. This was in line with
our forecast but a touch above consensus of 5.2%. Core inflation was unchanged at
4.8% y/y, which was also in line with our forecast and marginally higher than the
median consensus forecast of 4.7%. Food price inflation also was unchanged, leaving
Peter Worthington
+27 21 927 6525
Absa, South Africa
Miyelani Maluleke
+27 11 895 5655
Absa, South Africa
http://cib.absa.co.za
Barclays | South Africa Morning Sheet
20 July 2017 2
Barclays | South Africa Morning Sheet
20 July 2017 3
all of the easing in headline CPI to come from lower fuel prices. Fuel prices fell 1.8% m/m
during June on lower crude oil prices and a firmer ZAR. Combined with favorable base
effects, this pushed fuel price inflation to just 2.0% y/y (May: 8.0%), subtracting 0.3pp from
headline inflation. Food price inflation was stable at 6.9% y/y, as higher meat price inflation
offset a generalized slowdown across the rest of the food basket. Although June is a high
survey month that includes housing, there were no major surprises across the rest of the
basket, as reflected by the stable core. We have adjusted our near-term Brent crude oil
assumption to reflect the latest consensus, which sees the prices at USD56/bbl by year-end
and at USD59/bbl at the end of 2018. On food, we think the lower crop prices and favorable
base effects could dominate rising meat price inflation and we still expect an easing to 3.2%
in Q1 18. Meanwhile, we expect core to fall slightly and track around 4.7% over the coming
months before easing further to 4.5% by year-end. Against this, we expect headline CPI
inflation will bounce higher from August but continue its broad trend downwards, reaching
4.6% y/y by year-end and reaching a low point of 4.3% in February 2018.
The May retail sales data had some strong upside surprises. Seasonally adjusted retail
sales rose by 0.9% m/m during May, delivering y/y growth of 1.7%. This was well ahead
of consensus (-0.5% y/y) and our relatively more pessimistic forecast (-1.5%). The strength
in the May data is even more significant given that the April data were revised higher to
show an increase of 2.0% y/y (previous: +1.5%). Following the surprisingly sharp
contraction in retail sales during Q1, the latest data are a welcome sign that a strong
rebound is likely in Q2. The data add further material upside risk to our Q2 GDP forecast of
0.6% q/q saar. More significantly, ahead of today’s rate decision, the data would have been
a further welcome signal to the MPC that the surprise GDP contraction in Q1 is likely to be
short lived; see South Africa: A welcome upside surprise in May retail sales , 19 July 2017.
Fitch today published its analysis of Treasury’s action plan for inclusive growth,
published on 19 July. Consistent with our own analysis (see South Africa Morning Sheet, 14
July for more details), Fitch is doubtful that the plan will do much to boost growth, since
much of the plan is simply previously announced measures or business as usual. Fitch
welcomed the introduction of deadlines for the measures, though it noted that many of
them were quite tight and not all of them were likely to be met. Fitch also noted that the
need to reform state-owned enterprises was imperative, but difficult to achieve. Fitch said
that weak growth remained a key risk to its BB+ sovereign rating on South Africa (Stable
Outlook), which it reaffirmed in June. On balance we think the rating agencies will wait to
see the results of the ANC’s December electoral conference before deciding on any further
rating changes, but we would not be surprised if Fitch changes its outlook to Negative
before then, if growth continues to disappoint, fiscal consolidation slides markedly or state-
owned enterprises manifest further needs for bailouts.
Barclays | South Africa Morning Sheet
20 July 2017 4
FIGURE 1
Calendar
Time Country Event Period Consensus Barclays Prior Prior-1
19-Jul 10:00 SA CPI, % y/y Jun 5.2 5.1 A 5.4 5.3
10:00 SA CPI, % m/m Jun 0.2 0.2 A 0.3 0.1
10:00 SA Core CPI, % y/y Jun 4.7 4.8 A 4.8 4.8
10:00 SA Core CPI, % m/m Jun 0.2 0.4 A 0.1 0.2
13:00 SA Retail Sales constant, % y/y May -0.3 1.7 A 2.0 R 0.9
13:00 SA Retail Sales constant, % m/m, sa May 0.2 0.9 A 0.7 0.4
20-Jul SA SARB Repo rate, % Jul-20 7.00 7.00 7.00 7.00
Source: Bloomberg, Barclays Research
FIGURE 2
Review of last few weeks’ key domestic data releases
Main indicators Period Survey Actual Prior Comments
South Africa: Manufacturing production,
% y/y May -2.5 -0.8 A -4.2 R
South Africa: Manufacturing production,
% m/m, sa May 0.5 -0.3 A 2.3
South Africa: Mining production, % y/y May 2.2 3.6 A 1.6 R
South Africa: Mining output, % m/m sa May 1.0 -0.2 A -1.4 R
Source: Statistics South Africa, Bloomberg, Barclays Research
Note: In the Period Column F indicates “final”. In the Prior column, an R signals “revised” while a P signals “preliminary”
Barclays | South Africa Morning Sheet
20 July 2017 5
FIGURE 3
Rand price of oil
FIGURE 4
SA petrol price movements, as of 18 July 2017
Source: Thomson Reuters, Barclays Research Source: CEF, Barclays Research
FIGURE 5
Agriculture futures prices
FIGURE 6
ZAR performance
Source: SAFEX, Thomson Reuters, Barclays Research Note: Rise/fall in Nominal effective exchange rate implies ZAR app/depreciation.
Source: Thomson Reuters
400
450
500
550
600
650
700
750
800
850ZAR/bbl Petrol 95
unleaded
Petrol 93
unleaded
Diesel
0.05%
Diesel
0.005%
Pump price (c/l) 1,286 1,263 1,097 1,102
Basic fuel price (c/l) 527 510 512 518
Daily over/(under)
recovery (c/l)-22 -19 -27 -28
Avg. over/(under)
recovery (c/l)-10 -7 -21 -23
o/w due to int'l price 4 7 -7 -8
o/w due to FX rate -15 -14 -14 -15
A petrol price move that fully reflects the month-to-date over/under
recovery in July will add 0.04pp to the CPI.
1,500
2,000
2,500
3,000
3,500
4,000
3,700
3,900
4,100
4,300
4,500
4,700
Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17
R/mtR/mt Wheat (LHS)
White maize (RHS)
Yellow maize (RHS)
12
12.5
13
13.5
14
14.5
15
50
52
54
56
58
60
62
64
66
68
70
Jul-16 Oct-16 Jan-17 Apr-17 Jul-17
IndexNEER (LHS) USD/ZAR (RHS)
Barclays | South Africa Morning Sheet
20 July 2017 6
FIGURE 7
Barclays exchange rate forecasts (end of period)
USDZAR EURZAR CNYZAR ZARJPY GBPZAR
Monthly
Dec-16 13.74 14.45 1.96 8.53 16.94
Jan-17 13.48 14.55 1.96 8.37 16.95
Feb-17 13.13 13.88 1.91 8.59 16.25
Mar-17 13.41 14.30 1.95 8.30 16.84
Apr-17 13.37 14.56 1.94 8.34 17.32
May-17 13.12 14.71 1.92 8.47 16.87
Jun-17 13.07 14.94 1.93 8.58 17.03
Jul-17 F 13.31 14.98 1.96 8.31 17.73
Aug-17 F 13.43 14.99 1.98 8.18 18.08
Sep-17 F 13.66 15.03 2.01 7.90 18.79
Oct-17 F 13.73 15.10 2.02 7.81 19.12
Nov-17 F 13.76 15.14 2.02 7.76 19.29
Dec-17 F 13.83 15.21 2.03 7.66 19.63
Jan-18 F 13.96 15.13 2.05 7.59 19.34
Feb-18 F 14.03 15.09 2.06 7.56 19.20
Mar-18 F 14.17 15.01 2.08 7.48 18.92
Apr-18 F 14.28 15.49 2.10 7.31 20.03
May-18 F 14.34 15.73 2.11 7.22 20.59
Jun-18 F 14.46 16.20 2.13 7.05 21.71
Jul-18 F 14.63 16.45 2.15 6.95 22.21
Aug-18 F 14.72 16.57 2.16 6.89 22.46
Sep-18 F 14.88 16.82 2.19 6.79 22.96
Oct-18 F 15.10 17.13 2.22 6.66 23.55
Nov-18 F 15.21 17.28 2.24 6.60 23.85
Dec-18 F 15.43 17.59 2.27 6.48 24.45
Quarterly
Q4 16 13.74 14.45 1.96 8.53 16.94
Q1 17 F 13.41 14.30 1.95 8.30 16.84
Q2 17 F 13.07 14.94 1.93 8.58 17.03
Q3 17 F 13.66 15.03 2.01 7.90 18.79
Q4 17 F 13.83 15.21 2.03 7.66 19.63
Q1 18 F 14.17 15.01 2.08 7.48 18.92
Q2 18 F 14.46 16.20 2.13 7.05 21.71
Q3 18 F 14.88 16.82 2.19 6.79 22.96
Q4 18 F 15.43 17.59 2.27 6.48 24.45
Q1 19 F 16.12 18.54 2.37 6.14 26.15
Q2 19 F 16.71 19.38 2.46 5.87 27.71
Q3 19 F 16.96 19.81 2.51 5.73 28.72
Q4 19 F 17.28 20.21 2.56 5.61 29.41
Q1 20 F 17.55 20.57 2.60 5.51 30.04
Q2 20 F 17.72 20.91 2.64 5.42 30.95
Q3 20 F 17.67 20.99 2.64 5.41 31.40
Q4 20 F 18.02 21.45 2.69 5.30 32.17
Annual
2016 13.74 14.45 1.96 8.53 16.94
2017 F 13.83 15.21 2.03 7.66 19.63
2018 F 15.43 17.59 2.27 6.48 24.45
2019 F 17.28 20.21 2.56 5.61 29.41
2020 F 18.02 21.45 2.69 5.30 32.17
2021 F 19.01 23.01 2.84 5.00 35.20
Source: Bloomberg, Barclays Research
Barclays | South Africa Morning Sheet
20 July 2017 7
FIGURE 8
Main macroeconomic variables in South Africa
2016 2017 2018
2015 2016 2017F 2018F 2019F 2020F Q3 Q4 Q1 Q2F Q3F Q4F Q1F Q2F Q3F Q4F
Output (% q/q saar)
Real GDP 0.4 -0.3 -0.7 0.6 0.5 0.8 1.2 1.4 1.6 2.0 1.3 0.3 0.3 1.2 1.8 2.0
Real GDP (%y/y) 0.6 0.4 0.6 0.0 0.0 0.3 0.8 1.0 1.3 1.6 1.3 0.3 0.3 1.2 1.8 2.0
Private consumption 2.2 2.2 -2.3 1.0 1.1 1.6 1.0 1.0 1.0 1.0 1.7 0.8 0.6 1.1 1.7 1.9
Public consumption 1.9 0.3 -1.0 2.8 1.9 0.1 1.0 1.0 1.0 1.0 0.5 2.0 1.0 1.1 1.0 1.0
Investment -3.5 1.7 1.0 -4.3 -0.8 0.5 1.4 1.6 1.7 2.0 2.3 -3.9 -1.0 0.7 2.3 2.8
Exports -21.2 12.5 -3.2 5.6 0.5 1.1 1.3 2.0 2.1 3.4 3.9 -0.1 0.5 1.8 2.1 2.2
Imports -1.0 6.1 3.2 4.6 1.9 1.9 1.5 1.5 0.7 1.1 5.4 -3.7 2.4 1.7 1.9 2.3
Prices (% y/y)
CPI inflation 6.0 6.6 6.3 5.3 5.1 5.0 4.7 5.2 5.7 5.8 4.6 6.3 5.4 5.3 5.6 5.5
Core CPI inflation 5.7 5.7 5.2 4.9 4.8 4.7 4.8 5.2 5.3 5.4 5.5 5.6 4.9 5.3 5.4 5.4
PPI inflation 7.1 6.9 5.5 4.8 4.6 4.4 4.3 4.4 4.8 5.3 3.6 7.1 4.8 4.7 4.9 4.7
External and government accounts (% of GDP)
Current account -3.8 -1.7 -2.1 -2.6 -2.9 -3.1 -3.3 -3.4 -3.4 -3.4 -4.4 -3.3 -2.7 -3.4 -3.6 -3.6
Consolidated fiscal balance* n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a -3.4 -3.3 -3.5 -3.1 -2.9 -2.6
Consolidated primary balance* n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a -0.1 0.2 0.1 0.7 0.9 12
Government debt* n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 49.0 51.0 53.1 55.1 55.0 54.6
Interest rates (% eop)
Repurchase rate 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 6.25 7.00 7.00 7.00 7.00 7.00
Prime rate 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 9.75 10.50 10.50 10.50 10.50 10.50
Note:*For fiscal year commencing 1 April.
Source: SARB, National Treasury, Stats SA, Thomson Reuters, Barclays Research
Barclays | South Africa Morning Sheet
20 July 2017 8
FIGURE 9
Detailed CPI inflation forecasts
Date CPI index CPI % y/y Core CPI index Core CPI % y/y Food CPI index Food CPI % y/y Brent, $/bbl* Brent R/bbl
Jan-16 94.4 6.2 95.1 5.5 91.2 6.9 31 502
Feb-16 95.7 7.0 96.4 5.7 93.1 8.6 32 508
Mar-16 96.4 6.3 97.3 5.4 94.6 9.5 38 590
Apr-16 97.2 6.2 97.6 5.5 96.3 10.9 42 608
May-16 97.4 6.2 97.7 5.4 96.6 10.5 47 716
Jun-16 97.9 6.3 98.1 5.5 96.6 10.9 48 728
Jul-16 98.7 6.0 98.7 5.7 97.0 11.2 45 656
Aug-16 98.6 5.9 98.9 5.8 97.8 11.3 47 644
Sep-16 98.8 6.1 99.2 5.5 97.9 11.3 48 669
Oct-16 99.3 6.4 99.4 5.6 98.8 11.8 51 717
Nov-16 99.6 6.6 99.5 5.6 99.2 11.5 47 656
Dec-16 100.0 6.7 100.0 5.9 100.0 11.7 55 761
Jan-17 100.6 6.6 100.3 5.5 101.6 11.4 55 752
Feb-17 101.7 6.3 101.4 5.2 102.3 9.9 56 740
Mar-17 102.3 6.1 102.1 4.9 102.8 8.7 53 680
Apr-17 102.4 5.3 102.3 4.8 102.8 6.7 54 724
May-17 102.7 5.4 102.4 4.8 103.3 6.9 51 699
Jun-17F 102.9 5.1 102.9 4.8 103.0 6.6 53 729
Jul-17F 103.1 4.5 103.4 4.7 102.9 6.1 55 752
Aug-17F 103.7 5.2 103.6 4.7 102.9 5.3 56 765
Sep-17F 104.1 5.4 104.0 4.8 103.0 5.2 57 778
Oct-17F 104.3 5.1 104.2 4.8 103.5 4.8 58 789
Nov-17F 104.5 4.9 104.3 4.8 103.6 4.5 58 801
Dec-17F 104.7 4.7 104.5 4.5 103.3 3.3 58 812
Jan-18F 105.3 4.6 104.9 4.6 104.8 3.1 58 821
Feb-18F 106.1 4.3 106.0 4.5 105.0 2.6 59 833
Mar-18F 107.2 4.8 107.2 5.0 105.6 2.7 59 846
Apr-18F 107.6 5.1 107.5 5.1 106.1 3.2 60 863
May-18F 107.9 5.1 107.7 5.2 106.7 3.2 60 875
Jun-18F 108.3 5.2 108.2 5.2 106.6 3.5 61 885
Jul-18F 109.3 6.0 108.8 5.3 106.8 3.8 60 888
Aug-18F 109.6 5.6 109.1 5.3 107.3 4.2 60 897
Sep-18F 110.1 5.7 109.6 5.3 107.8 4.6 60 906
Oct-18F 110.4 5.8 109.8 5.4 108.8 5.1 60 913
Nov-18F 110.6 5.9 109.9 5.4 109.3 5.5 60 927
Dec-18F 110.9 6.0 110.2 5.5 109.4 5.9 61 946
Quarterly averages
Q1 16
6.5
5.6
8.4
Q2 16
6.2
5.5
10.8
Q3 16
6.0 5.7 11.3
Q4 16
6.6 5.7 11.7
Q1 17
6.3 5.2 10.0
Q2 17F
5.3 4.8 6.8
Q3 17F
5.0 4.8 5.5
Q4 17F
4.9 4.7 4.2
Q1 18F
4.6 4.7 2.8
Q2 18F
5.1 5.2 3.3
Q3 18F
5.8 5.3 4.2
Q4 18F
5.9 5.4 5.5
Annual averages
2012
5.6
4.6
7.1
2013
5.8
5.2
5.7
2014
6.1
5.6
7.6
2015
4.6
5.5
5.1
2016
6.3 5.6 10.5
2017F
5.4 4.9 6.6
2018F
5.4 5.2 4.0
Note: *Forecasts are based on the futures curve of Brent crude oil. Source: Stats SA, Barclays Research
Analyst Certification
We, Miyelani Maluleke and Peter Worthington, hereby certify (1) that the views expressed in this research report accurately reflect our personal views
about any or all of the subject securities or issuers referred to in this research report and (2) no part of our compensation was, is or will be directly or
indirectly related to the specific recommendations or views expressed in this research report.
Important Disclosures:
Barclays Research is a part of the Investment Bank of Barclays Bank PLC and its affiliates (collectively and each individually, "Barclays")
All authors contributing to this research report are Research Analysts unless otherwise indicated. The publication date at the top of the report reflects the
local time where the report was produced and may differ from the release date provided in GMT.
Availability of Disclosures:
For current important disclosures regarding any issuers which are the subject of this research report please refer to https://publicresearch.barclays.com
or alternatively send a written request to: Barclays Research Compliance, 745 Seventh Avenue, 13th Floor, New York, NY 10019 or call +1-212-526-1072.
Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors
should be aware that Barclays may have a conflict of interest that could affect the objectivity of this report. Barclays Capital Inc. and/or one of its affiliates
regularly trades, generally deals as principal and generally provides liquidity (as market maker or otherwise) in the debt securities that are the subject of
this research report (and related derivatives thereof). Barclays trading desks may have either a long and / or short position in such securities, other
financial instruments and / or derivatives, which may pose a conflict with the interests of investing customers. Where permitted and subject to
appropriate information barrier restrictions, Barclays fixed income research analysts regularly interact with its trading desk personnel regarding current
market conditions and prices. Barclays fixed income research analysts receive compensation based on various factors including, but not limited to, the
quality of their work, the overall performance of the firm (including the profitability of the Investment Banking Department), the profitability and revenues
of the Markets business and the potential interest of the firm's investing clients in research with respect to the asset class covered by the analyst. To the
extent that any historical pricing information was obtained from Barclays trading desks, the firm makes no representation that it is accurate or complete.
All levels, prices and spreads are historical and do not represent current market levels, prices or spreads, some or all of which may have changed since the
publication of this document. The Investment Bank's Research Department produces various types of research including, but not limited to, fundamental
analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research may differ from
recommendations contained in other types of research, whether as a result of differing time horizons, methodologies, or otherwise. In order to access
Barclays Statement regarding Research Dissemination Policies and Procedures, please refer to
https://publicresearch.barcap.com/static/S_ResearchDissemination.html. In order to access Barclays Research Conflict Management Policy Statement,
please refer to: https://publicresearch.barcap.com/static/S_ConflictManagement.html.
All pricing information is indicative only. Prices are sourced from Thomson Reuters as of the last available closing price at the time of production of the
research report, unless another time and source is indicated.
Explanation of other types of investment recommendations produced by Barclays FICC Research:
Trade ideas contained herein that have been produced by the Credit teams within Barclays Research are valid at current market conditions and may not
be otherwise relied upon.
Trade ideas contained herein that have been produced by other research teams within Barclays FICC Research shall remain open until they are
subsequently amended or closed in a future research report.
Disclosure of previous investment recommendations produced by Barclays FICC Research:
Barclays FICC Research may have published other investment recommendations in respect of the same securities/instruments recommended in this
research report during the preceding 12 months. To view previous investment recommendations published by Barclays FICC Research in the preceding
12 months please refer to https://live.barcap.com/go/research/ResearchInvestmentRecommendations.
Barclays legal entities involved in publishing research:
Barclays Bank PLC (Barclays, UK)
Barclays Capital Inc. (BCI, US)
Barclays Securities Japan Limited (BSJL, Japan)
Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong)
Barclays Capital Canada Inc. (BCCI, Canada)
Absa Bank Limited (Absa, South Africa)
Barclays Bank Mexico, S.A. (BBMX, Mexico)
Barclays Securities (India) Private Limited (BSIPL, India)
Barclays Bank PLC, India branch (Barclays Bank, India)
Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)
Disclaimer:
This publication has been produced by the Investment Bank of Barclays Bank PLC and/or one or more of its affiliates (collectively and each individually,
"Barclays"). It has been distributed by one or more Barclays legal entities that are a part of the Investment Bank as provided below. It is provided to our
clients for information purposes only, and Barclays makes no express or implied warranties, and expressly disclaims all warranties of merchantability or
fitness for a particular purpose or use with respect to any data included in this publication. To the extent that this publication states on the front page that
it is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared
for retail investors under U.S. FINRA Rule 2242, it is an “institutional debt research report” and distribution to retail investors is strictly prohibited. Barclays
also distributes such institutional debt research reports to various issuers, regulatory and academic organisations for informational purposes and not for
the purpose of making investment decisions regarding any debt securities. Any such recipients that do not want to continue receiving Barclays
institutional debt research reports should contact [email protected]. Barclays will not treat unauthorized recipients of this report as its clients
and accepts no liability for use by them of the contents which may not be suitable for their personal use. Prices shown are indicative and Barclays is not
offering to buy or sell or soliciting offers to buy or sell any financial instrument.
Without limiting any of the foregoing and to the extent permitted by law, in no event shall Barclays, nor any affiliate, nor any of their respective officers,
directors, partners, or employees have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss
of anticipated savings or loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this
publication or its contents.
Other than disclosures relating to Barclays, the information contained in this publication has been obtained from sources that Barclays Research believes
to be reliable, but Barclays does not represent or warrant that it is accurate or complete. Barclays is not responsible for, and makes no warranties
whatsoever as to, the information or opinions contained in any written, electronic, audio or video presentations of third parties that are accessible via a
direct hyperlink in this publication or via a hyperlink to a third-party web site (‘Third-Party Content’). Any such Third-Party Content has not been adopted
or endorsed by Barclays, does not represent the views or opinions of Barclays, and is not incorporated by reference into this publication. Third-Party
Content is provided for information purposes only and Barclays has not independently verified its accuracy or completeness.
The views in this publication are those of the author(s) and are subject to change, and Barclays has no obligation to update its opinions or the information
in this publication. If this publication contains recommendations, those recommendations reflect solely and exclusively those of the authoring analyst(s),
and such opinions were prepared independently of any other interests, including those of Barclays and/or its affiliates. This publication does not
constitute personal investment advice or take into account the individual financial circumstances or objectives of the clients who receive it. The securities
discussed herein may not be suitable for all investors. Barclays recommends that investors independently evaluate each issuer, security or instrument
discussed herein and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to
day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual
results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
This document is being distributed (1) only by or with the approval of an authorised person (Barclays Bank PLC) or (2) to, and is directed at (a) persons in
the United Kingdom having professional experience in matters relating to investments and who fall within the definition of "investment professionals" in
Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (b) high net worth companies,
unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Order; or (c) other persons to whom it
may otherwise lawfully be communicated (all such persons being "Relevant Persons"). Any investment or investment activity to which this
communication relates is only available to and will only be engaged in with Relevant Persons. Any other persons who receive this communication should
not rely on or act upon it. Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and
the Prudential Regulation Authority and is a member of the London Stock Exchange.
The Investment Bank of Barclays Bank PLC undertakes U.S. securities business in the name of its wholly owned subsidiary Barclays Capital Inc., a FINRA
and SIPC member. Barclays Capital Inc., a U.S. registered broker/dealer, is distributing this material in the United States and, in connection therewith
accepts responsibility for its contents. Any U.S. person wishing to effect a transaction in any security discussed herein should do so only by contacting a
representative of Barclays Capital Inc. in the U.S. at 745 Seventh Avenue, New York, New York 10019.
Non-U.S. persons should contact and execute transactions through a Barclays Bank PLC branch or affiliate in their home jurisdiction unless local
regulations permit otherwise.
Barclays Bank PLC, Paris Branch (registered in France under Paris RCS number 381 066 281) is regulated by the Autorité des marchés financiers and the
Autorité de contrôle prudentiel. Registered office 34/36 Avenue de Friedland 75008 Paris.
This material is distributed in Canada by Barclays Capital Canada Inc., a registered investment dealer, a Dealer Member of IIROC (www.iiroc.ca), and a
Member of the Canadian Investor Protection Fund (CIPF).
Subject to the conditions of this publication as set out above, the Corporate & Investment Banking Division of Absa Bank Limited, an authorised financial
services provider (Registration No.: 1986/004794/06. Registered Credit Provider Reg No NCRCP7), is distributing this material in South Africa. Absa Bank
Limited is regulated by the South African Reserve Bank. This publication is not, nor is it intended to be, advice as defined and/or contemplated in the
(South African) Financial Advisory and Intermediary Services Act, 37 of 2002, or any other financial, investment, trading, tax, legal, accounting, retirement,
actuarial or other professional advice or service whatsoever. Any South African person or entity wishing to effect a transaction in any security discussed
herein should do so only by contacting a representative of the Corporate & Investment Banking Division of Absa Bank Limited in South Africa, 15 Alice
Lane, Sandton, Johannesburg, Gauteng 2196. Absa Bank Limited is a member of the Barclays group.
All research reports are distributed to institutional investors in Japan by Barclays Securities Japan Limited. Barclays Securities Japan Limited is a joint-stock
company incorporated in Japan with registered office of 6-10-1 Roppongi, Minato-ku, Tokyo 106-6131, Japan. It is a subsidiary of Barclays Bank PLC and a
registered financial instruments firm regulated by the Financial Services Agency of Japan. Registered Number: Kanto Zaimukyokucho (kinsho) No. 143.
Barclays Bank PLC, Hong Kong Branch is distributing this material in Hong Kong as an authorised institution regulated by the Hong Kong Monetary
Authority. Registered Office: 41/F, Cheung Kong Center, 2 Queen's Road Central, Hong Kong.
All Indian securities-related research and other equity research produced by the Investment Bank are distributed in India by Barclays Securities (India)
Private Limited (BSIPL). BSIPL is a company incorporated under the Companies Act, 1956 having CIN U67120MH2006PTC161063. BSIPL is registered and
regulated by the Securities and Exchange Board of India (SEBI) as a Research Analyst: INH000001519; Portfolio Manager INP000002585; Stock
Broker/Trading and Clearing Member: National Stock Exchange of India Limited (NSE) Capital Market INB231292732, NSE Futures & Options
INF231292732, NSE Currency derivatives INE231450334, Bombay Stock Exchange Limited (BSE) Capital Market INB011292738, BSE Futures & Options
INF011292738; Depository Participant (DP) with the National Securities & Depositories Limited (NSDL): DP ID: IN-DP-NSDL-299-2008; Investment
Adviser: INA000000391. The registered office of BSIPL is at 208, Ceejay House, Shivsagar Estate, Dr. A. Besant Road, Worli, Mumbai – 400 018, India.
Telephone No: +91 2267196000. Fax number: +91 22 67196100. Any other reports produced by the Investment Bank are distributed in India by Barclays
Bank PLC, India Branch, an associate of BSIPL in India that is registered with Reserve Bank of India (RBI) as a Banking Company under the provisions of
The Banking Regulation Act, 1949 (Regn No BOM43) and registered with SEBI as Merchant Banker (Regn No INM000002129) and also as Banker to the
Issue (Regn No INBI00000950). Barclays Investments and Loans (India) Limited, registered with RBI as Non Banking Financial Company (Regn No RBI
CoR-07-00258), and Barclays Wealth Trustees (India) Private Limited, registered with Registrar of Companies (CIN U93000MH2008PTC188438), are
associates of BSIPL in India that are not authorised to distribute any reports produced by the Investment Bank.
Barclays Bank PLC Frankfurt Branch distributes this material in Germany under the supervision of Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).
This material is distributed in Brazil by Banco Barclays S.A.
This material is distributed in Mexico by Barclays Bank Mexico, S.A.
Nothing herein should be considered investment advice as defined in the Israeli Regulation of Investment Advisory, Investment Marketing and Portfolio
Management Law, 1995 (“Advisory Law”). This document is being made to eligible clients (as defined under the Advisory Law) only. Barclays Israeli
branch previously held an investment marketing license with the Israel Securities Authority but it cancelled such license on 30/11/2014 as it solely
provides its services to eligible clients pursuant to available exemptions under the Advisory Law, therefore a license with the Israel Securities Authority is
not required. Accordingly, Barclays does not maintain an insurance coverage pursuant to the Advisory Law.
Barclays Bank PLC in the Dubai International Financial Centre (Registered No. 0060) is regulated by the Dubai Financial Services Authority (DFSA).
Principal place of business in the Dubai International Financial Centre: The Gate Village, Building 4, Level 4, PO Box 506504, Dubai, United Arab Emirates.
Barclays Bank PLC-DIFC Branch, may only undertake the financial services activities that fall within the scope of its existing DFSA licence. Related financial
products or services are only available to Professional Clients, as defined by the Dubai Financial Services Authority.
Barclays Bank PLC in the UAE is regulated by the Central Bank of the UAE and is licensed to conduct business activities as a branch of a commercial bank
incorporated outside the UAE in Dubai (Licence No.: 13/1844/2008, Registered Office: Building No. 6, Burj Dubai Business Hub, Sheikh Zayed Road, Dubai
City) and Abu Dhabi (Licence No.: 13/952/2008, Registered Office: Al Jazira Towers, Hamdan Street, PO Box 2734, Abu Dhabi).
Barclays Bank PLC in the Qatar Financial Centre (Registered No. 00018) is authorised by the Qatar Financial Centre Regulatory Authority (QFCRA).
Barclays Bank PLC-QFC Branch may only undertake the regulated activities that fall within the scope of its existing QFCRA licence. Principal place of
business in Qatar: Qatar Financial Centre, Office 1002, 10th Floor, QFC Tower, Diplomatic Area, West Bay, PO Box 15891, Doha, Qatar. Related financial
products or services are only available to Business Customers as defined by the Qatar Financial Centre Regulatory Authority.
This material is distributed in the UAE (including the Dubai International Financial Centre) and Qatar by Barclays Bank PLC.
This material is not intended for investors who are not Qualified Investors according to the laws of the Russian Federation as it might contain information
about or description of the features of financial instruments not admitted for public offering and/or circulation in the Russian Federation and thus not
eligible for non-Qualified Investors. If you are not a Qualified Investor according to the laws of the Russian Federation, please dispose of any copy of this
material in your possession.
This material is distributed in Singapore by the Singapore branch of Barclays Bank PLC, a bank licensed in Singapore by the Monetary Authority of
Singapore. For matters in connection with this report, recipients in Singapore may contact the Singapore branch of Barclays Bank PLC, whose registered
address is 10 Marina Boulevard, #23-01 Marina Bay Financial Centre Tower 2, Singapore 018983.
This material is distributed to persons in Australia by either Barclays Bank plc , Barclays Capital Inc., Barclays Capital Securities Limited or Barclays Capital
Asia Limited. None of Barclays Bank plc, nor any of the other referenced Barclays group entities, hold an Australian financial services licence and instead
they each rely on an exemption from the requirement to hold such a licence. This material is intended to only be distributed to “wholesale clients” as
defined by the Australian Corporations Act 2001.
IRS Circular 230 Prepared Materials Disclaimer: Barclays does not provide tax advice and nothing contained herein should be construed to be tax advice.
Please be advised that any discussion of U.S. tax matters contained herein (including any attachments) (i) is not intended or written to be used, and
cannot be used, by you for the purpose of avoiding U.S. tax-related penalties; and (ii) was written to support the promotion or marketing of the
transactions or other matters addressed herein. Accordingly, you should seek advice based on your particular circumstances from an independent tax
advisor.
© Copyright Barclays Bank PLC (2017). All rights reserved. No part of this publication may be reproduced or redistributed in any manner without the prior
written permission of Barclays. Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place, London, E14 5HP. Additional
information regarding this publication will be furnished upon request.
BARCRES-63852b76