Vontobel : Raiffeisen and Vontobel to continue collaboration in certain areas beyond end of cooperation agreement

• Raiffeisen and Vontobel to continue collaboration in certain areas beyond end of cooperation agreement

  St. Gallen / Zurich, 9 February 2016. Raiffeisen and Vontobel are to continue to work together beyond the expiry of the current cooperation agreement in June 2017. Vontobel will remain a partner of Raiffeisen and its subsidiaries in certain areas of asset management and the securities business.

  Following the termination of the cooperation agreement with Vontobel with effect from mid-June 2017 and the arbitration proceedings, joint discussions revealed that working together in specific areas would still be advantageous for both partners.

  The new arrangements relate to collaboration in the areas of investment products and securities settlement, and will run through to the end of 2020 at least.

  The existing cooperation agreement covering the period through to June 2017 will continue to apply until it expires.

  Patrik Gisel, CEO of Raiffeisen Switzerland: 'Continuing to work together in certain specific areas is in our clients' interests, and creates a platform for new, business-oriented products, models and processes for both companies.'

  Vontobel CEO Dr. Zeno Staub: 'We are pleased that Vontobel will remain a key product and service partner for Raiffeisen beyond 2017. This partnership will contribute to ensuring a high-quality range of products and services for Raiffeisen's clients in the future.'

  Enquiries:

  Medienstelle Raiffeisen Schweiz:

  Franz Würth / Simone Isermann

  [phone] / [phone]

  [e-mail]

  Medienstelle Vontobel:

  Peter Dietlmaier / Rebeca Garcia

  [phone] / [phone]

  [e-mail] / [e-mail]

  Investor Relations Vontobel:

  Michel Roserens, [phone]

  [e-mail]

  Raiffeisen: third largest banking group in Switzerland

  The Raiffeisen Group is the leading Swiss retail bank. The third largest bank in the Swiss banking sector has 1.9 million cooperative members, who are co-owners of their Raiffeisen bank. The Raiffeisen Group is present at 1,004 locations throughout Switzerland. The 292 legally autonomous cooperative Raiffeisen banks are amalgamated into Raiffeisen Switzerland Cooperative, which is the strategic leader of the entire Raiffeisen Group. Notenstein La Roche Private Bank Ltd and Vescore Ltd are subsidiaries of Raiffeisen Switzerland Cooperative. As of 30.06.15, the Raiffeisen Group had CHF 200 billion assets under management and CHF 162 billion loans to clients. The market share is 16.7% in the mortgage business and 18.5% of the savings market. Total assets amount to CHF 201 billion.

  Vontobel

  Vontobel's mission is to protect and build the wealth our clients have entrusted to us over the long term. Specializing in active asset management and tailor-made investment solutions, we provide responsible and forward-looking advice. In doing so, we are committed to Swiss quality and performance standards. With their good name, our owner family has stood by these principles for generations. As of 30 June 2015, Vontobel held CHF 181 billion of client assets. Around 1,400 employees worldwide provide first-rate, customized services for clients with an international focus. The registered shares of Vontobel Holding AG are listed on the SIX Swiss Exchange. The Vontobel families and the Vontobel Foundation hold the majority of shares and votes in the company. www.vontobel.com

• Vontobel Mobile Private Banking now includes a trading function - Vontobel is constantly improving digital services for private clients

  From 9 February, the new trading function in the Vontobel Mobile Private Banking app will allow private banking clients to make transactions at any time, wherever they may be. Since its launch one year ago, the app has been expanded constantly. The app is the ideal complement to the personalised advice provided by client advisors.

  Vontobel launched the Vontobel Mobile Private Banking app one year ago. Since then, we have been constantly improving the digital functionalities for private clients. Private banking clients can access detailed information from the mobile advisory platform using mobile devices such as tablets and smartphones. The app allows clients to access all their portfolio and account information, to view a multitude of investment ideas, and to consult comprehensive, award-winning research data and market quotes. Clients can also choose to use the messaging function for secure communications with their personal client advisor.

  From 9 February, private clients in Switzerland will be able to use the Vontobel Mobile Private Banking app to buy and sell securities any time, anywhere. Clients will also be able to set up limits, such as stop-loss limits. The overview function lets clients keep an eye on pending orders and edit the orders if necessary.

  'The Vontobel Mobile Private Banking app gives clients the option of accessing information about their investments at any time, no matter where they are, and to make stock exchange transactions immediately based on that information. The app is the ideal complement to the personalised advice provided by dedicated client advisors. We are making targeted use of technology to improve our client services, so as to enhance our personal advisory services and expand our expertise as an active asset manager,' explains Georg Schubiger, Head of Vontobel Private Banking.

  Planned new functionalities in the Vontobel Mobile Private Banking app include allowing clients to view bank statements and other documents and to generate personalised reports on their mobile devices by mid-2016. At the same time, we will be rolling out the Vontobel Mobile Private Banking app to clients in Europe.

  Contact

  Media Relations:	Rebeca Garcia	[phone]
  Investor Relations:	Michel Roserens	[phone]

• Institutional Investor names Vontobel Equity Research best team for Swiss equities 2016

  Institutional Investor, a widely-read publication among US investors, for the first time named Panagiotis Spiliopoulos and his team as '2016 All-Europe Research Team: No. 1 Switzerland' in its prestigious annual Institutional Investor survey. This latest award as well as the top spot in the Extel survey highlights our position as leading broker for Swiss equities.

  This award is a recognition of Vontobel Equity Research team's long-term and consistently outstanding performance as well as the quality research products and services offered to institutional investors and asset managers. Panagiotis Spiliopoulos and his team of thirteen long-standing and experienced analysts cover around 95% of Swiss market capitalization. With their well-founded opinions and analysis as well as their excellent and direct contact with the management of the companies covered by IB Research, they have distinguished themselves in Switzerland and Europe. This is in part also due to the Extel survey, where Vontobel has figured as the leading Swiss equities broker for a number of years.

  'We are proud to have received this award from Institutional Investor for the first time, especially as the publication is highly regarded by major investors. At the same time, we consider it our duty to continue to be a reliable and competent partner for our clients and ensure that our high quality research lives up to their expectations,' commented Peter Romanzina, Head Vontobel Brokerage, on hearing the good news.

  For the 31st time, Institutional Investor conducted a broadly based survey in which the world's leading research departments and more than 100 of the biggest US investors as well as major investors in Asia and Europe cast their votes for specific research teams or individual analysts. The team or candidate with the highest percentage of votes cast is declared the winner.

  Contact

  Media Relations:	Rebeca Garcia	[phone]
  Investor Relations:	Michel Roserens	[phone]

• Economic overhaul: China's long road ahead

  
  'One country, two systems', a famous phrase coined by the late Chinese leader Deng Xiaoping, has served China well: letting Hong Kong's western-style economy co-exist alongside a state-controlled system has helped fuel spectacular growth rates in the past decades. Chinese officials were able to take credit for that. However, belief in the leadership's economic savvy has waned amid sagging growth and heavy-handed government interventions in the country's equity markets.

  There is little doubt that China has achieved a lot since it opened up to the world under Deng Xiaoping in the late 1970s: GDP growth rates have been stellar and the improvement in the standard of living impressive. However, this success has been increasingly credit-driven and overly dependent on investment in areas such as real estate and heavy industry. At the third plenum of the central committee of China's Communist party in November 2013, the country's leadership recognised the need to rebalance the economy towards consumption and services, outlining an ambitious long-term plan to allow market forces to play a larger role. This is easier said than done: the slowdown of the economy has turned out to be sharper than expected. In addition, economic and monetary policies have lacked coherence to the point that a crisis of confidence has emerged. This can be seen from the massive drop in Chinese foreign-exchange reserves over the past 18 months (see chart 1).

  Chart 1: Chinese foreign-currency reserves have dropped from a high level

  in billions of US dollars
  
  Source: Thomson Reuters Datastream, Vontobel Asset Management

  Yawning gap between stated intention and action
  It seems that the government is trying to pursue objectives that are mutually exclusive. For instance, fighting a depreciation of the Chinese yuan by selling foreign-exchange reserves is preventing the Peoples' Bank of China (PBoC) from easing monetary policy at a time when it is sorely needed. By the same token, the authorities have identified massive overcapacity in industries such as steel, cement or coal, but balk at addressing this issue for fear of a surge in unemployment - a development that could threaten social stability. Likewise, the authorities correctly assume that a higher degree of freedom for economic agents is necessary for climbing up the GDP-per-capita ladder; but they resort to intervention when markets behave 'badly' - i.e. when they do not follow the leadership's script. The Chinese government's massive and recurrent tampering with local bourses since the summer of 2015 bears witness to this policy incoherence.

  The core issue in China is that there is no easy way of doing away with the mountain of debt that has piled up over the years from massive investments in areas with sharply declining profitability (see chart 2). The result is a downward trend in economic profits at a time when disinflation has become pervasive, making debt sustainability a major challenge. As a rule, countries facing such imbalances experience a full-blown crisis with a sharp drop in their currencies and economic output, eventually setting the stage for a sustainable recovery. Given plentiful foreign-exchange reserves, a positive trade balance and the ability to control the yuan, China has the capacity to delay or smoothen such a downward adjustment. However, it cannot defy gravity forever.

  Chart 2: Loans to Chinese companies and private households have risen dramatically

  in percent of GDP
  
  Source: Thomson Reuters Datastream, Vontobel Asset Management

  Oil price should rebound in the second half of 2016
  The Chinese economic slowdown has hit commodity prices badly, with ominous consequences for emerging markets in general and commodity-producing countries as well as mining companies in particular. While we identified such issues relatively early and kept our exposure to emerging market and commodity-related assets to a minimum, we have moved to an overweight stance on equities (via developed-market stocks) into the December 2015 correction. This proved to be premature given the sharp sell-off of risky assets so far in 2016. We have retained our moderate overweight stance towards equities as we consider the sell-off excessive and expect some relief due to central-bank action given subdued inflation readings and downward risk to economic growth. However, corporate earnings remain lackluster and the upside potential of equity markets appears limited. Tactical flexibility remains key, as well as a strict selective approach.

  Commodity holdings increased
  We have used the plunge in crude-oil prices below 30 US dollars to move to a neutral position in commodities (from underweight) as we expect oil to recover in the second half of this year. In addition, we have re-established an exposure to gold on an increased likelihood of further policy accommodation from central banks and potential safe-haven flows. Last but not least, we have reduced the magnitude of our US-dollar overweight as we deem the near-term risk/reward ratio to be finely balanced.

  Given the developments mentioned above, it is evident that our scenario 3 for 2016 ('Markets face a crisis of confidence') - one we considered unlikely a short while ago - has gained in probability. We still believe that scenario 1 ('Robust US economy, sluggish global growth') remains the most likely one. Meanwhile, scenario 2 ('US economy pulls ahead, global growth improving') can be discarded at this point (see our scenario overview in the December 2015 issue of the Investors' Outlook). For our central scenario to prevail, further policy action from monetary authorities will, however, be required. Such actions are needed to prevent financial conditions from tightening excessively - i.e. wider credit spreads and lower equity markets - and affect the real economy. In this respect, the European Central Bank (ECB) has recently reaffirmed that it remains fully committed to reaching its inflation target. We therefore expect ECB President Mario Draghi to announce further monetary-policy easing at the upcoming March meeting.

  
  

• Economic overhaul: China's long road ahead

  
  'One country, two systems', a famous phrase coined by the late Chinese leader Deng Xiaoping, has served China well: letting Hong Kong's western-style economy co-exist alongside a state-controlled system has helped fuel spectacular growth rates in the past decades. Chinese officials were able to take credit for that. However, belief in the leadership's economic savvy has waned amid sagging growth and heavy-handed government interventions in the country's equity markets.

  There is little doubt that China has achieved a lot since it opened up to the world under Deng Xiaoping in the late 1970s: GDP growth rates have been stellar and the improvement in the standard of living impressive. However, this success has been increasingly credit-driven and overly dependent on investment in areas such as real estate and heavy industry. At the third plenum of the central committee of China's Communist party in November 2013, the country's leadership recognised the need to rebalance the economy towards consumption and services, outlining an ambitious long-term plan to allow market forces to play a larger role. This is easier said than done: the slowdown of the economy has turned out to be sharper than expected. In addition, economic and monetary policies have lacked coherence to the point that a crisis of confidence has emerged. This can be seen from the massive drop in Chinese foreign-exchange reserves over the past 18 months (see chart 1).

  Chart 1: Chinese foreign-currency reserves have dropped from a high level

  in billions of US dollars
  
  Source: Thomson Reuters Datastream, Vontobel Asset Management

  Yawning gap between stated intention and action
  It seems that the government is trying to pursue objectives that are mutually exclusive. For instance, fighting a depreciation of the Chinese yuan by selling foreign-exchange reserves is preventing the Peoples' Bank of China (PBoC) from easing monetary policy at a time when it is sorely needed. By the same token, the authorities have identified massive overcapacity in industries such as steel, cement or coal, but balk at addressing this issue for fear of a surge in unemployment - a development that could threaten social stability. Likewise, the authorities correctly assume that a higher degree of freedom for economic agents is necessary for climbing up the GDP-per-capita ladder; but they resort to intervention when markets behave 'badly' - i.e. when they do not follow the leadership's script. The Chinese government's massive and recurrent tampering with local bourses since the summer of 2015 bears witness to this policy incoherence.

  The core issue in China is that there is no easy way of doing away with the mountain of debt that has piled up over the years from massive investments in areas with sharply declining profitability (see chart 2). The result is a downward trend in economic profits at a time when disinflation has become pervasive, making debt sustainability a major challenge. As a rule, countries facing such imbalances experience a full-blown crisis with a sharp drop in their currencies and economic output, eventually setting the stage for a sustainable recovery. Given plentiful foreign-exchange reserves, a positive trade balance and the ability to control the yuan, China has the capacity to delay or smoothen such a downward adjustment. However, it cannot defy gravity forever.

  Chart 2: Loans to Chinese companies and private households have risen dramatically

  in percent of GDP
  
  Source: Thomson Reuters Datastream, Vontobel Asset Management

  Oil price should rebound in the second half of 2016
  The Chinese economic slowdown has hit commodity prices badly, with ominous consequences for emerging markets in general and commodity-producing countries as well as mining companies in particular. While we identified such issues relatively early and kept our exposure to emerging market and commodity-related assets to a minimum, we have moved to an overweight stance on equities (via developed-market stocks) into the December 2015 correction. This proved to be premature given the sharp sell-off of risky assets so far in 2016. We have retained our moderate overweight stance towards equities as we consider the sell-off excessive and expect some relief due to central-bank action given subdued inflation readings and downward risk to economic growth. However, corporate earnings remain lackluster and the upside potential of equity markets appears limited. Tactical flexibility remains key, as well as a strict selective approach.

  Commodity holdings increased
  We have used the plunge in crude-oil prices below 30 US dollars to move to a neutral position in commodities (from underweight) as we expect oil to recover in the second half of this year. In addition, we have re-established an exposure to gold on an increased likelihood of further policy accommodation from central banks and potential safe-haven flows. Last but not least, we have reduced the magnitude of our US-dollar overweight as we deem the near-term risk/reward ratio to be finely balanced.

  Given the developments mentioned above, it is evident that our scenario 3 for 2016 ('Markets face a crisis of confidence') - one we considered unlikely a short while ago - has gained in probability. We still believe that scenario 1 ('Robust US economy, sluggish global growth') remains the most likely one. Meanwhile, scenario 2 ('US economy pulls ahead, global growth improving') can be discarded at this point (see our scenario overview in the December 2015 issue of the Investors' Outlook). For our central scenario to prevail, further policy action from monetary authorities will, however, be required. Such actions are needed to prevent financial conditions from tightening excessively - i.e. wider credit spreads and lower equity markets - and affect the real economy. In this respect, the European Central Bank (ECB) has recently reaffirmed that it remains fully committed to reaching its inflation target. We therefore expect ECB President Mario Draghi to announce further monetary-policy easing at the upcoming March meeting.