russia’s triumphs and traumas · source: credit suisse, thomson reuters datastream; *us, japan,...

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS.

Russia’s triumphs and traumas21 March 2016

1

Global markets have been in Risk Appetite panic this year, a rare event that normally accompanies a major

shock to the global economy…

Source: Credit Suisse

-7

-3

1

5

9

1980 1985 1990 1995 2000 2005 2010 2015

Euphoria

PanicRecession Mexico Defaults Black Monday

Recession/WarERM Crisis

Mexico Devaluation

Asian Crisis LTCM

Tech Bubble Enron/WorldCom

September 11th

Bear Stearns

Global Financial Crisis

Euro Crisis

2

Long bond yields have fallen to historically low levels

Source: Credit Suisse, Thomson Reuters DataStream; *US, Japan, UK, France, Germany, Italy, Netherlands, Spain

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

G3+ 10-year yields with kernel

3

…as Japan joins the negative rates “experiment”


Negative30%

Positive70%

30% of G10 sovereign bonds trading at negative rates(includes US, Japan, euro area, Australia, New Zealand,

Switzerland, Sweden, Denmark)

Negative57%

Positive43%

…including 57% of countries with negative policy rates (includes Japan, euro area, Switzerland, Sweden,

Denmark)

4

Credit markets have seen substantial distress, with the pain in US high yield spilling over to Europe


0

100

200

300

400

500

600

700

800

900

1000

2-Jan-15 2-Mar-15 2-May-15 2-Jul-15 2-Sep-15 2-Nov-15 2-Jan-16

Europe IG spread (bp)

Europe HY spread (bp)

US IG spread (bp)

US HY spread (bp)

5

Source: Credit Suisse, Thomson Reuters DataStream

Equity markets are threatening a “bear” market

80

85

90

95

100

105

110

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Major equity indices, log levels, 100 = Jan 2000

NasdaqS&P 500Euro StoxxTopix

6

So what's going on? The list of concerns that we hear from clients is long:

Weak and slowing global growth – with nominal much weaker than real

Fear that the US will tip into recession

Concerns about the capacity of central banks to continue to underpin the system

Chinese FX and equity market interventions kicked this off

The move by the BoJ to negative policy rates amplified the fears

The dramatic fall in yields has also hit sentiment regarding the health of the banking sector, particularly in Europe

Continued policy divergence

Weakness in China, and concern that policymakers are beginning to “lose control”

Geopolitical risks, including the US election, the risk of Brexit, as well as on going instability in the Middle East, Russia etc.

7

We think a key factor has been the weakness in the nominal economy….


0%

1%

2%

3%

4%

5%

6%

7%

8%

07 08 09 10 11 12 13 14 15

Nominal global GDP (y/y%)

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

07 08 09 10 11 12 13 14 15

Real global GDP (y/y%)

8

And while IP has remained positive, 18 months of sluggish growth has seen the level of activity fall well

below trend

Source: Bureau of Labor Statistics, Credit Suisse

40

45

50

55

60

98 00 02 04 06 08 10 12 14 16

Global manufacturing PMI new orders

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

80 84 88 92 96 00 04 08 12 16

Global IP deviation from 3.1% trend (pp)

Estimate

9

…with EM IP particularly weak relative to historical trends, as the “new normal” asserts itself in China


-20%

-15%

-10%

-5%

0%

5%

10%

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

EM Industrial Production deviation from 7.7% trend (pp)

10

We think that the commodity bust is at the center of many of these issues, with EM demand much weaker

than DM – which has actually been ok…


-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

DM total (goods consumption and investment)

Global

EM x-China total (goods consumption and investment)

11

We also think that production at a global level will undershoot demand in coming months, suggesting that

IP growth should rebound by-mid year

Source: Credit Suisse, Thomson Reuters DataStream, ISM

-4%

-2%

0%

2%

4%

6%

8%

10%

40

45

50

55

60

65

70

2011 2012 2013 2014 2015 2016

ISM New orders

Global IP Momentum, 3m/3m% ann., rhs

1980-2015 trend growth (3.1% p.a.)

12

While talk of a US recession has been very main steam, we note that the core of the US is still robust…

Source: Bureau of Labor Statistics, Credit Suisse

1.0

1.5

2.0

2.5

3.0

10 11 12 13 14 15 16

Average Hourly EarningsTotal Private Industries, y/y%

-800

-600

-400

-200

0

200

400

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Nonfarm Payrolls ex-Census, 3mma, thous.

13

With household demand still rock solid…

Source: Bureau of Economic Analysis, Credit Suisse

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2010 2011 2012 2013 2014 2015

Contributions to US real GDP growth, percentage points

All Other GDP

Personal Consumption and Residential Investment

14

As with the global story, weakness in the US remains very much related to commodities and the industrial

sector

Source: Bureau of Economic Analysis, Credit Suisse

-60 -45 -30 -15 0 15 30 45

Petroleum (14)

Mining (1)

Other (1)

Food and Beverage (1)

Farm (2)

Multimerchandise Shopping (4)

Warehouses (3)

Other Commercial (2)

Religious (1)

Transportation (3)

Educational (3)

Health Care (8)

Power (15)

Office (12)

Communication (4)

Lodging (5)

Amusement (3)

Manufacturing (18)

Q4’15/Q4’14 % change in nonresidential structure investment, (% of total in parentheses)

15

And rather than deflation, it is now clear that US inflation has troughed… THE FED IS STILL IN PLAY…

Source: BEA, BLS, Federal Reserve Bank of Dallas, Federal Reserve Bank of Cleveland, Credit Suisse

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US Core Inflation Measures

Core CPI

Cleveland Fed Median

Cleveland Fed Trimmed Mean

Core PCE

Dallas Fed Trimmed Mean

16

Importantly we see fiscal policy turning supportive for the first time since the crisis

Source: Congressional Budget Office, Credit Suisse

-0.5-0.8

1.6

4.7

-1.2

0.0

-1.0

-2.5

-1.0

0.0

0.50.3

0.1

0.7

0.1

-4.0

-2.0

0.0

2.0

4.0

6.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

FY 2016 to 2020projections

Fiscal Easing

Fiscal Tightening

17

Source: Thomson Reuters DataStream, ECB, Credit Suisse

Notably consumer spending in Europe has also been recovering steadily

113

115

117

119

121

123

125

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Euro area retail & auto sales

18

Source: Thomson Reuters DataStream, Credit Suisse

However, the higher frequency data suggest that near term growth has peaked…

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

1999 2001 2003 2005 2007 2009 2011 2013 2015

PCA of four euro area cyclical indicators

First principal component

Filter

19

Source: Thomson Reuters DataStream, Credit Suisse

…making the case for more action from the ECB

11

13

15

17

19

21

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Euro area: bond market finance % non-financial corporations liabilities

20

Source: Yougov, Survation, ICM, Ipsos, Credit Suisse

UK: Brexit – likely to be close run

26%

31%

36%

41%

46%

51%

56%

2012 2013 2014 2015 2016

Monthly average of opinion polls on UK membership of EU

Remain

Leave

21

The key question in China is whether the slowdown has further to run? We think it has only just begun…

Source: CEIC, Credit Suisse

7

8

9

10

11

12

13

00 02 04 06 08 10 12 14

Real GDP growth (y/y%, 3 year ma)

0

5

10

15

20

00 02 04 06 08 10 12 14

IP (y/y%)

22

In the near term, IP growth is trying to stabilize, but the respite will be temporary, with a substantial

further slowing likely…

Source: Credit Suisse; CEIC; NBS; Thomson Reuters DataStream; Markit Economics

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

2008 2009 2010 2011 2012 2013 2014 2015 2016

Standardized China IP Indicators

Markit China Manuf. PMI New Orders

Common trend of 12 individual Chinese industrial products

CS Basic Material Index, 2m lead, common trend of global commodities markets

China industrial production (IP) growth momentum (3m/3m ann.%), estimated from official headline IP statistics

23

But beyond the near term the issues are mainly structural. Much of the “hockey stick” in the 2000s was

driven by a one-off boost from joining the WTO

11.5%

25.4%

9.4%

3.5%

0%

5%

10%

15%

20%

25%

30%

1995-2001 2002-2007 2010-2013 2014-2015

Annual growth rate of China real exports


24

A structural shift post Lehman in the relationship between growth and trade is not helping


0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

91 93 95 97 99 01 03 05 07 09 11 13 15

Global trade volume/Global IP

25

Weak exports also reflect the fact that China is now so big, making further market share gains harder


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

80 85 90 95 00 05 10 15

Share of global industrial production

US

China

26

Investment growth has slowed noticeably


13

14

14

15

15

16

05 06 07 08 09 10 11 12 13 14 15

Nominal fixed asset investment(log level, seasonally adjusted)

Pre-crisis trend:26% p.a.

Recent trend: 11% p.a.

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

05 06 07 08 09 10 11 12 13 14 15

Fixed Asset Investment Growth(Nominal, % yoy, 3mma)

GFCF (from annual GDP data)Manufacturing (32%)Infrastructure (13%)Real estate (20%)

27

However the investment share of output has yet to fall meaningfully

Source: NBS, Credit Suisse

30%

32%

34%

36%

38%

40%

42%

44%

46%

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Investment share of China GDP

28

Housing investment has probably peaked in level terms, although prices have recovered in recent months

as the stimulus hits


9.7

10.2

10.7

11.2

11.7

12.2

04 05 06 07 08 09 10 11 12 13 14 15

Residential Building Sales and Construction(floor space, log, SA, 3mma)

SoldStartsCompleted

0

10

20

30

40

50

60

70

80

11 12 13 14 15

Number of Cities Experiencing Price Increase/Decrease

IncreaseUnchangedDecrease

29

The fall in FX reserves has many nervous

Source: Credit Suisse, the BLOOMBERG PROFESSIONAL™ service, CEIC

-150

-100

-50

0

50

100

150

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

China FX Reserve Monthly Change, bn USD, 3mma

China monthly change in FX reserves,bn USD

3mma

30

Moving Back To Markets, QE had the desired impact on wealth; but with the Fed in play, risks are building

3

3.2

3.4

3.6

3.8

4

4.2

4.4

4.6

4.8

5

1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012

US Private Net Worth to GDP Ratio

Source: Credit Suisse, Federal Reserve, BEA

31

Oil looks to be approaching a bottom, but don’t expect a big bounce

Source: IMF, Credit Suisse, the BLOOMBERG PROFESSIONAL™ service

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Oil, US$/barrel, 2010 Real Prices

1990-2000 decade average ($28.50)

Long term average (since 1900)

32

While the dollar may pause in the near term, the bull market has further to run


90

95

100

105

110

115

120

125

130

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Real Effective Exchange Rate (2010=100)

33

We expect US yields to move a little higher, but China and Europe will keep the long end contained

Source: Credit Suisse, the BLOOMBERG PROFESSIONAL™ service

0

1

2

3

4

5

6

7

8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US 10y yield and forecasts

10y Treasury Yield

CS Forecast

34

Our Equity Strategist does not expect the US stock market to continue to fall, with the S&P likely to finish

the year a little higher

0

500

1000

1500

2000

2500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

S&P 500

YE 2016 forecast: 2050


35

The rouble/US$ exchange rate: still tracking oil prices

Source: The BLOOMBERG PROFESSIONAL™ service, Credit Suisse

36

Most oil-exporting nations have seen a large current account deterioration since 2013 -- Russia stands out

among them with its current account improvementTerms-of-trade effect: Real-income-consequence (in % of 2013 GDP) of the fall in global oil prices that took place between 2013 and 2015

Actual change in the current account of the balance of payments between 2013 and 2015(in % of 2013 GDP)

Sources: The BLOOMBERG PROFESIONAL™ service, the UN’s commodity trade database, the IMF’s country reports, and Credit Suisse; the 2015 estimates reflect the outcome for the first three quarters of that year, rather than the full year.

The two charts above compared to each other

37

Russia’s real GDP per capita is now same as in 2008; by comparison it doubled between 1998 and 2008

Source: IMF’s WEO database from October 2015, and Credit Suisse’s EM Economics Quarterly from 10 March 2016

Comment: The growth differentials between the BRIC countries are to a large extent a function of their ratios of fixed investment to GDP, which in 2014amounted to 48% in China, 35% in India, 19% in Russia and 17% in Brazil. Other factors that impede growth in Russia and Brazil include curbs on domesticcompetition, direct government involvement in many production sectors, poor legal title protection, bureaucratic hurdles preventing start-ups, shrinking slack inthe labour market, and declining scope (on account of balance of payments constraints and high inflation) for propping up growth through rapid credit expansionthrough the banking system.

38

Russia’s dollar-GDP grew faster than China’s between 2000 and 2013…but since then falling export prices and sharp rouble depreciation have killed Russia’s $-GDP

Source: IMF’s WEO database from October 2015, updated with data from Credit Suisse’s EM Economics Quarterly , 10 March 2016

39

As recently as in 2014, Russia’s per capita income was high by BRIC standards (and by Turkey’s), but it now

similar to China’s, Brazil’s and Turkey’s

Sources: IMF’s WEO database from October 2015, Credit Suisse’s EM Economics Quarterly from 10 March 2016 and The BLOOMBERG PROFESIONAL™ service. Quoted forecasts are from Credit Suisse’s Research Team. Quoted ratings and spreads are up-to-date as of 14 March 2016.

Income, population, ratings for the BRIC countries and TurkeyChina India Brazil Russia Turkey

Annual compound growth in real GDP per capita 2000‐2015 (in %) 9.0 5.9 1.6 3.7 2.8Annual GDP per capita at current prices 2014 (in US dollars) 7,547 1,623 11,915 12,948 10,876Annual GDP per capita at current prices, forecast, 2016 (in US dollars) 7,906 1,701 7,143 8,118 8,640Annual GDP per capita at purchasing power parity exchange rates 2014 (in US dollars) 12,880 5,855 16,096 24,805 20,188Population end‐2016 (in millions, forecast) 1,383 1,297 206 144 74Cumulative population growth 2010‐2015 (in %) 2.6 6.3 4.6 0.6 2.8Sovereign credit rating (S&P/Moody's) AA‐/Aa3 BBB‐/Baa3 BB/Ba2 BB+/Ba1 BB+/Baa35‐year sovereign CDS spread, bps, 14 March 2016 114 142 390 286 255

40

Miserable 2015 growth and inflation stats for Russia and Brazil; less miserable data for Turkey

Sources: IMF’s WEO database from October 2015, Credit Suisse’s EM Economics Quarterly from 10 March 2016. Quoted forecasts are from Credit Suisse’s Research Team.

41

Collapsing domestic demand has led to current account improvement (but fiscal balance deterioration) in Russia

and Brazil – Russia can afford this better than Brazil

Sources: IMF’s WEO database from October 2015, Credit Suisse’s EM Economics Quarterly from 10 March 2016. Quoted forecasts are from Credit Suisse’s Research Team.

42

The Russian government’s low level of indebtedness is a stand-out credit-positive factor, one that mitigates

harm done by the widening fiscal deficit

Sources: Gross debt numbers are from Credit Suisse’s EM Economics Quarterly from 10 March 2016, with an added line for the numbers for Turkey from IMF’s WEO database from October 2015. Quoted forecasts are from Credit Suisse’s Research Team, except in the case of Turkey (the figure for Turkey is an IMF forecast).

43

Putin’s largely immune to worsening economic situation, but the government is not

Consumer Confidence vs Support of Government, Putin

Source: Levada

30

40

50

60

70

80

90

100

Jan

Feb

Mar

chAp

rilM

ayJu

neJu

lyA

ugS

ep Oct

Nov

Dec Ja

nFe

bM

arch

April

May

June

July

Aug

Sep Oct

Nov

Dec Ja

nFe

b

Putin Support

Government Support

Consumer Expectations

44

Appetite for Protest's Low, but Rising

Do you expect protests in your region?

0

5

10

15

20

25

30

Feb 2014. Feb 2015. Apr 2015. June 2015. Aug 2015. Oct 2015. Dec 2015. Feb 2015.

Economic Protests

Political Protests

45

Disclosure AppendixAnalyst CertificationThe analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

Important DisclosuresCredit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail, please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research:.http://www.csfb.com/research-and-analytics/disclaimer/managing_conflicts_disclaimer.html..Credit Suisse's policy is to publish research reports as it deems appropriate, based on developments with the subject issuer, the sector or the market that may have a material impact on the research views or opinions stated herein..The analyst(s) involved in the preparation of this research report received compensation that is based upon various factors, including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's Investment Banking and Fixed Income Divisions..Credit Suisse may trade as principal in the securities or derivatives of the issuers that are the subject of this report..At any point in time, Credit Suisse is likely to have significant holdings in the securities mentioned in this report..As at the date of this report, Credit Suisse acts as a market maker or liquidity provider in the debt securities of the subject issuer(s) mentioned in this report..For important disclosure information on securities recommended in this report, please visit the website at.https://rave.credit-suisse.com/disclosures/view/fixedincome.or call +1-212-538-7625..For the history of trade ideas suggested by the Fixed Income Research department over the previous 12 months, please view the document at.https://plus.credit-suisse.com/r/aaCzfz. Credit Suisse clients with access to the Locus website may refer to.http://www.credit-suisse.com/locus. For the history of trade ideas suggested by Emerging Markets Strategy Research, please see the latest.Emerging Markets Fixed Income Views.report on.Credit Suisse PLUS..Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

46

Disclosure Appendix cont'dReferences in this report to Credit Suisse include all of the subsidiaries and affiliates of Credit Suisse operating under its investment banking division. For more information on our structure, please use the following link:.https://www.credit-suisse.com/who-we-are.This report may contain material that is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution,publication, availability or use would be contrary to law or regulation or which would subject Credit Suisse AG or its affiliates ("CS") to any registration or licensing requirement within such jurisdiction. All material presented in this report, unless specificallyindicated otherwise, is under copyright to CS. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of CS. All trademarks,service marks and logos used in this report are trademarks or service marks or registered trademarks or service marks of CS or its affiliates. The information, tools and material presented in this report are provided to you for information purposes onlyand are not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. CS may not have taken any steps to ensure that the securities referred to in this report are suitable forany particular investor. CS will not treat recipients of this report as its customers by virtue of their receiving this report. The investments and services contained or referred to in this report may not be suitable for you and it is recommended that you consultan independent investment advisor if you are in doubt about such investments or investment services. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable orappropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. CS does not advise on the tax consequences of investments and you are advised to contact an independent tax adviser. Please note in particularthat the bases and levels of taxation may change.Information and opinions presented in this report have been obtained or derived from sources believed by CS to be reliable, but CS makes no representation as to their accuracy or completeness. CSaccepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to CS. This report is not to berelied upon in substitution for the exercise of independent judgment. CS may have issued, and may in the future issue, other communications that are inconsistent with, and reach different conclusions from, the information presented in this report. Thosecommunications reflect the different assumptions, views and analytical methods of the analysts who prepared them and CS is under no obligation to ensure that such other communications are brought to the attention of any recipient of this report. Someinvestments referred to in this report will be offered solely by a single entity and in the case of some investments solely by CS, or an associate of CS or CS may be the only market maker in such investments. Past performance should not be taken as anindication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions and estimates contained in this report reflect a judgment at its original date of publicationby CS and are subject to change without notice. The price, value of and income from any of the securities or financial instruments mentioned in this report can fall as well as rise. The value of securities and financial instruments is subject to exchangerate fluctuation that may have a positive or adverse effect on the price or income of such securities or financial instruments. Investors in securities such as ADR's, the values of which are influenced by currency volatility, effectively assume this risk.Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured securitymay be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility, and the credit quality of any issuer or reference issuer.Any investor interested in purchasing a structured product should conduct their own investigation and analysis of the product and consult with their own professional advisers as to the risks involved in making such a purchase. Some investmentsdiscussed in this report may have a high level of volatility. High volatility investments may experience sudden and large falls in their value causing losses when that investment is realised. Those losses may equal your original investment. Indeed, in thecase of some investments the potential losses may exceed the amount of initial investment and, in such circumstances, you may be required to pay more money to support those losses. Income yields from investments may fluctuate and, in consequence,initial capital paid to make the investment may be used as part of that income yield. Some investments may not be readily realisable and it may be difficult to sell or realise those investments, similarly it may prove difficult for you to obtain reliableinformation about the value, or risks, to which such an investment is exposed. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of CS, CS has not reviewed anysuch site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to CS's own website material) is provided solely for your convenience and information and the content of any suchwebsite does not in any way form part of this document. Accessing such website or following such link through this report or CS's website shall be at your own risk. This report is issued and distributed in Europe (except Switzerland) by Credit SuisseSecurities (Europe) Limited, One Cabot Square, London E14 4QJ, England, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. This report is issued anddistributed in Europe (except Switzerland) by Credit Suisse International, One Cabot Square, London E14 4QJ, England, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the PrudentialRegulation Authority. This report is being distributed in Germany by Credit Suisse Securities (Europe) Limited Niederlassung Frankfurt am Main regulated by the Bundesanstalt fuer Finanzdienstleistungsaufsicht ("BaFin"). This report is being distributedin the United States and Canada by Credit Suisse Securities (USA) LLC; in Switzerland by Credit Suisse AG; in Brazil by Banco de Investimentos Credit Suisse (Brasil) S.A or its affiliates; in Mexico by Banco Credit Suisse (México), S.A. (transactionsrelated to the securities mentioned in this report will only be effected in compliance with applicable regulation); in Japan by Credit Suisse Securities (Japan) Limited, Financial Instruments Firm, Director-General of Kanto Local Finance Bureau (Kinsho)No. 66, a member of Japan Securities Dealers Association, The Financial Futures Association of Japan, Japan Investment Advisers Association, Type II Financial Instruments Firms Association; elsewhere in Asia/ Pacific by whichever of the following is theappropriately authorised entity in the relevant jurisdiction:Credit Suisse (Hong Kong) Limited, Credit Suisse Equities (Australia) Limited, Credit Suisse Securities (Thailand) Limited, regulated by the Office of the Securities and Exchange Commission, Thailand,having registered address at 990 Abdulrahim Place, 27th Floor, Unit 2701, Rama IV Road, Silom, Bangrak, Bangkok 10500, Thailand, Tel. +66 2614 6000, Credit Suisse Securities (Malaysia) Sdn Bhd, Credit Suisse AG, Singapore Branch, Credit Suisse Securities(India) Private Limited (CIN no. U67120MH1996PTC104392) regulated by the Securities and Exchange Board of India as Research Analyst (registration no. INH 000001030) and as Stock Broker (registration no. INB230970637; INF230970637; INB010970631;INF010970631), having registered address at 9th Floor, Ceejay House, Dr.A.B. Road, Worli, Mumbai - 18, India, T- +91-22 6777 3777, Credit Suisse Securities (Europe) Limited, Seoul Branch, Credit Suisse AG, Taipei Securities Branch, PT Credit SuisseSecurities Indonesia, Credit Suisse Securities (Philippines ) Inc., and elsewhere in the world by the relevant authorised affiliate of the above. Credit Suisse (Hong Kong) Limited ("CSHK") is licensed and regulated by the Securities and Futures Commission of HongKong under the laws of Hong Kong, which differ from Australian laws. CSHKL does not hold an Australian financial services licence (AFSL) and is exempt from the requirement to hold an AFSL under the Corporations Act 2001 (the Act) under Class Order 03/1103published by the ASIC in respect of financial services provided to Australian wholesale clients (within the meaning of section 761G of the Act). Research on Taiwanese securities produced by Credit Suisse AG, Taipei Securities Branch has been prepared by aregistered Senior Business Person. Research provided to residents of Malaysia is authorised by the Head of Research for Credit Suisse Securities (Malaysia) Sdn Bhd, to whom they should direct any queries on +603 2723 2020. This report has been preparedand issued for distribution in Singapore to institutional investors, accredited investors and expert investors (each as defined under the Financial Advisers Regulations) only, and is also distributed by Credit Suisse AG, Singapore branch to overseas investors (asdefined under the Financial Advisers Regulations). By virtue of your status as an institutional investor, accredited investor, expert investor or overseas investor, Credit Suisse AG, Singapore branch is exempted from complying with certain compliance requirementsunder the Financial Advisers Act, Chapter 110 of Singapore (the "FAA"), the Financial Advisers Regulations and the relevant Notices and Guidelines issued thereunder, in respect of any financial advisory service which Credit Suisse AG, Singapore branch mayprovide to you. This information is being distributed by Credit Suisse AG (DIFC Branch), duly licensed and regulated by the Dubai Financial Services Authority (“DFSA”). Related financial services or products are only made available to Professional Clients orMarket Counterparties, as defined by the DFSA, and are not intended for any other persons. Credit Suisse AG (DIFC Branch) is located on Level 9 East, The Gate Building, DIFC, Dubai, United Arab Emirates. This research may not conform to Canadiandisclosure requirements. In jurisdictions where CS is not already registered or licensed to trade in securities, transactions will only be effected in accordance with applicable securities legislation, which will vary from jurisdiction to jurisdiction and may require that thetrade be made in accordance with applicable exemptions from registration or licensing requirements. Non-U.S. customers wishing to effect a transaction should contact a CS entity in their local jurisdiction unless governing law permits otherwise. U.S. customerswishing to effect a transaction should do so only by contacting a representative at Credit Suisse Securities (USA) LLC in the U.S. Please note that this research was originally prepared and issued by CS for distribution to their market professional and institutionalinvestor customers. Recipients who are not market professional or institutional investor customers of CS should seek the advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation ofits contents. This research may relate to investments or services of a person outside of the UK or to other matters which are not authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential RegulationAuthority or in respect of which the protections of the Prudential Regulation Authority and Financial Conduct Authority for private customers and/or the UK compensation scheme may not be available, and further details as to where this may be the case areavailable upon request in respect of this report. CS may provide various services to US municipal entities or obligated persons ("municipalities"), including suggesting individual transactions or trades and entering into such transactions. Any services CS provides tomunicipalities are not viewed as "advice" within the meaning of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. CS is providing any such services and related information solely on an arm's length basis and not as an advisor orfiduciary to the municipality. In connection with the provision of the any such services, there is no agreement, direct or indirect, between any municipality (including the officials, management, employees or agents thereof) and CS for CS to provide advice to themunicipality. Municipalities should consult with their financial, accounting and legal advisors regarding any such services provided by CS. In addition, CS is not acting for direct or indirect compensation to solicit the municipality on behalf of an unaffiliated broker,dealer, municipal securities dealer, municipal advisor, or investment adviser for the purpose of obtaining or retaining an engagement by the municipality for or in connection with Municipal Financial Products, the issuance of municipal securities, or of an investmentadviser to provide investment advisory services to or on behalf of the municipality. If this report is being distributed by a financial institution other than Credit Suisse AG, or its affiliates, that financial institution is solely responsible for distribution. Clients of thatinstitution should contact that institution to effect a transaction in the securities mentioned in this report or require further information. This report does not constitute investment advice by Credit Suisse to the clients of the distributing financial institution, and neitherCredit Suisse AG, its affiliates, and their respective officers, directors and employees accept any liability whatsoever for any direct or consequential loss arising from their use of this report or its content. Principal is not guaranteed. Commission is the commissionrate or the amount agreed with a customer when setting up an account or at any time after that.Copyright © 2016 CREDIT SUISSE AG and/or its affiliates. All rights reserved.Investment principal on bonds can be eroded depending on sale price or market price. In addition, there are bonds on which investment principal can be eroded due to changes inredemption amounts. Care is required when investing in such instruments.When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the purchaseprice only.

russia’s triumphs and traumas · source: credit suisse, thomson reuters datastream; *us, japan,...

Documents