Global Emerging Markets Fixed Income

March 2014

Investment products:
ARE NOT A BANK DEPOSIT OR ARE NOT FDIC ARE NOT INSURED BY ANY ARE NOT GUARANTEED BY MAY LOSE
OBLIGATION OF THE BANK OR ANY INSURED FEDERAL GOVERNMENT THE BANK OR ANY OF ITS VALUE
OF ITS AFFILIATES AGENCY AFFILIATES

All decisions regarding the tax implications of your investment(s) should be made in connection with your independent tax advisor.

For institutional one on one use only. Not for further distribution.
An asset manager with a deep Emerging Markets reach

One of the world’s leading investment management organizations with more than US$419.1
billion in assets under management
– Total emerging markets assets have grown from US$46 billion in 2005 to US$146.6 billion ending
September 2013
– Emerging markets fixed income assets total US$98.7 billion, 67% of total emerging markets assets
– Emerging markets debt assets managed by team in New York total US$14.5 billion

Emerging Markets Assets Growth*

175

150
$14.5

125 $16.5
S$ billions

100 $31.3

75
US

50
$84.2

25

0
2007 2008 2009 2010 2011 2012 YTD 2013

EM Fixed Income (ex-NY EMD) EM Equity

EM Other NY EMD Team

Source: HSBC Global Asset Management. Data as of 30 September 2013. Differences due to rounding.
* Prior to 2010, assets managed in Hong Kong and Singapore were not classified as Emerging markets.

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2
 “Putting our money where our mouth is”
Supplemental information as of 31 January 2014

Our holistic approach to portfolio construction is built without an inherent bias to any particular
emerging market asset class and actively allocates among potentially optimal opportunities

120% Emerging Markets Debt – Total Return Net Historical Exposures 12.0
100% 102%
99%
93% 94%
100% 88% 91% 10.0
84% 82%
80%
75% 74% 75%
80% 8.0
64% 63%

Duration (years)
51% 52%
60% 48% 6.0
32% 31%
37%
40% 30% 30% 22% 20% 23% 4.0

20% 2.0

0% 0.0

-20% -2.0
Dec-11

JJan-12

Feb-12

Mar-12

May-12

JJun-12

Jul-12

Oct-12

Nov-12

Dec-12

JJan-13

Feb-13

Mar-13

May-13

JJun-13

Jul-13

Oct-13

Nov-13

Dec-13

JJan-14
Sep-12

Sep-13
Apr-12

Aug-12

Apr-13

Aug-13
O

O
M

M
A

A
M

M
D

D
F

F
S

S
A

A
Sovereign Quasi Corporate Local Rates Local Fx Equity
― Net Exposure ― Duration (rhs)

Source: HSBC Global Asset Management. Data as of 31 January 2014. Weightings and holdings are subject to change without notice. Please see important disclosure at the end of this
presentation concerning calculation methodology for characteristics. Any portfolio characteristics shown herein, including average position sizes and sector allocations among others, are for
ill t ti purposes and
illustrative d reflects
fl t ththe representative
t ti accountt off th
the composite.
it IInformation
f ti should
h ld nott b
be construed
t d as a recommendation
d ti or solicitation
li it ti tto b
buy or sellll any securities
iti within
ithi th
the
sectors shown. Data is supplemental to the GIPS® compliant presentation at the end of this material. Each portfolio may differ due to individual client restrictions and guidelines. Accordingly
individual results will vary.

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3
Emerging Markets volatility, a consequence of interbank illiquidity

 2012’s outsized EM debt returns, and 2013’s correction was much more a consequence of
technicals than a change in fundamentals

 Technicals and valuations are now extremely supportive of both hard currency and local currency
assets

 It is important to not confuse currency depreciation with fundamental deterioration

 Bifurcation

Past performance is no guarantee of future results.

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4
2013 inflows into emerging market debt were strong until late May …

2013 began with strong inflows to EMD, continuing the trend from 2012
With the Fed hinting
g at tapering,
p g, emerging
g g markets corrected sharply
p y with close to -$40bn
$ in net
outflows

120

100 97.5

80 80.1

60
US$ bn

46.6
40 43.2

20
9.7
0 -3.2

-20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2008 2009 2010 2011 2012 2013

Source: HSBC Global Asset Management, JPMorgan, as of 31 December 2013. Asset class flows include both retail flows and strategic flows. Past performance is no guarantee of future results.

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5
…while new issuance accelerated substantially

$198bn of issuance from Jan – Amount Issued (USD notionally)

May was absorbed by only $40bn 01 Jan 2012 – 01 Jan 2013 –
2012 2013
YoY
31 May 2012 31 May 2013 change
off inflows
f to the asset class
OVERALL 146,979,973,250 198,516,133,079 307,366,600,778 339,834,923,249 10.6%
USD-denom 139,982,126,000 182,587,309,000 286,501,045,188 292,190,220,416
Issuance increase 10.6% y-o-y in EUR-denom 6,997,847,250 15,928,824,079 20,865,555,590 47,644,702,833
2013 vs 2012
Sovereign 43,904,290,000 33,511,313,961 69,445,592,088 75,453,572,092 8.7%
Corporate 103,075,683,250 165,004,819,118 237,921,008,689 264,381,351,157 11.1%
Growth in IG issuance was close LatAm 45,557,126,000 49,887,549,000 107,164,843,743 119,416,650,985 11.4%
to flat while non-IG increased by Asia 46,125,000,000 74,873,503,118 85,558,964,490 102,615,604,898 19.9%
32% (including
(incl ding not
not-rated
rated bucket
b cket East Europe 36,050,147,250 53,040,690,961 78,971,044,736 85,269,219,866 8.0%
which may contain some IG) Middle East/ 17,247,700,000 20,414,390,000 34,786,747,809 32,533,447,500 -6.5%
Africa

Source: Bloomberg as of 31 December 2013 and HSBC Global Asset Management calculations. For illustrative purposes only.

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6
Trends in external debt spreads vary by rating sector

Evolution of emerging markets spreads over Treasuries

6 JPM EMBIG Spread (%)

5
4
3
Investment grade spreads have
2
1 remained stable
0
Dec-10 Dec-11 Dec-12 Dec-13
Steady increase in high yield spreads
4 IG Spread (%)
which is likely to continue
3
– Fundamentals in many high yield
2 countries
ti h have weakened
k d
– CCC rating implies limited access to
1
market funding
0
Dec-10
Dec 10 Dec-11
Dec 11 Dec-12
Dec 12 Dec-13
Dec 13

10 HY Spread (%)

8
6
4
2
0
Dec-10 Dec-11 Dec-12 Dec-13

Source: HSBC Global Asset Management, Bloomberg. Data as of 31 January 2014. For illustrative purposes only. Past performance is no guarantee of future results.

For institutional one on one use only. Not for further distribution.
7
EM external debt valuations and yields began to improve in May 2013

Aggregate
gg g Spread
p Levels
E t
External
l Debt
D bt Index
I d Yield
Yi ld
7,5

12/31/2012 12/31/2013
7

< 150 bps 31.43% 15.13% 65

6,5

Percent
150 – 200 bps 40.02% 19.06%
6

200 – 300 bps 2.90% 34.78%

5,5

300 – 400 bps 6.34% 15.11% 5

400 – 500 bps 3.45% 1.86% 4,5

> 500 bps 13 86%

13.86% 13 24%
13.24%
4
Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13

Sources: HSBC Global Asset Management, JP Morgan, External Debt Index Yield data as of 31 January 2014. For illustrative purposes only. Information may be dated and should not be relied upon.
Review and outlook is subject to change without notice. Past performance is no guarantee of future results.

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8
Balance sheets are strong across the larger IG sovereign countries

Real GDP CPI Budget balance Public ext. debt Total ext. debt Reserves
((% y
y/y)
y) ((% y
y/y)
y) ((% of GDP)) ((% of GDP)) ((% of GDP)) ((% of GDP))

Brazil 2.6 5.7 -3.4 5.1 23.4 17.5

Indonesia 5.5 7.0 -2.2 10.2 26.1 10.8

Colombia 4.5 2.7 -0.6 10.9 21.9 10.9

Peru 5.7 2.8 0.8 10.5 23.3 30.6

Poland 2.9 1.5 0.0 26.5 70.3 21.2

Panama 7.0 3.9 -2.7 29.9 36.2 6.3

Mexico 3.4 3.3 -3.4 16.6 29.1 12.5

Russia 2.8 5.9 -0.5 9.4 24.0 24.3

South Africa 3.3 5.2 -4.2 16.0 37.0 13.8

Turkey 4.0 7.4 -2.4 13.3 45.9 14.2

Source: Economist Intelligence Unit as of 31 December 2013. For illustrative purposes only.

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9
EM IG corporates look attractive and offer a pickup in spread compared
to US peers

160

150

140

130

120
bps

110

100

90

80

70

60
Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13

Aug-13

Sep-13

Oct-13
Jul-13

Nov-13

Dec-13

Jan-14
CEMBI IG - Barclays US IG spreads 1yr avg

Sources: HSBC Global Asset Management, JP Morgan, Bloomberg, Data as of 31 January 2014. Past performance is no guarantee of future results.

For institutional one on one use only. Not for further distribution.
10
Valuations and yields also improved in EM local debt and currencies

Local Rate Index Yield ((%)) Local Currency

y Index ((%))
7,5 1,3
Internal assessment
of EM currencies
looks attractive
7 1,2

6,5 1,1

6 1,0

5,5 0,9

5 0,8
Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14
Aug-12
Sep-12
Oct-12

Oct-13
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13

Aug-13
Sep-13
Jul-13

Nov-13
Dec-13
Jan-14

USD/ELMI historical USD/ELMI theoretical

Source: HSBC Global Asset Management, JP Morgan. Local Rate Index Field data as of 31 January 2014. Local rate index is the JPM GBI-EM Global Diversified. For illustrative purposes only. Past
performance is no guarantee of future results.

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The technical currency positioning is also now much cleaner…

Speculative Currency Positioning

115 400000

110 300000
200000
Loccal Currency Level

105

USD Contracts
100000
100 0
95 -100000
-200000

#U
90
-300000
85 -400000
80 -500000
Dec-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13

L
Local
lCCurrency IIndex
d IMM USD IIndex
d

200.000 Mexican Peso Positioning

150.000
# MXN Contractss

100.000

50.000

-50.000
Dec-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13

Source: HSBC Global Asset Management,

g Bloomberg. g Data as of 31 Januaryy 2014. The data p
presented is for informational p
purposes
p only
y and is not intended as an offer or solicitation for the
purchase or sale of any financial instrument or investment strategy. Past performance is no guarantee of future results. US$ positions expressed as the sum of the number of contracts of MXN, CAD,
AUD, EUR, and GBP that speculative accounts were long/short vs US$ at the Chicago Mercantile Exchange (CME).

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12
Currency valuations price in very pessimistic outcomes

Four countries, which account for 36.4% of the local bond benchmark, explain more than 90% of
the - 8.9% lost byy the local bond benchmark in 2013

Local bond and FX spot returns in USD (2013)

Local Bond FX spot returns JPM GBI-EM GD
(% p.a.) (% p.a.) (weight %)
Hungary 12.7
12 7 2.1
21 6.2
62
Poland 4.5 2.3 10.0
Nigeria 5.5 -2.6 2.0
Mexico 0.1 -1.4 10.0
Thailand -4.3 -6.5 8.0
Chile -12 9
-12.9 -8 8
-8.8 05
0.5
Malaysia -6.2 -6.7 10.0
Colombia -14.2 -8.4 3.5
Philippines -10.6 -7.6 0.5
Russia -3.2 -7.1 10.0
Brazil -13 6
-13.6 -13 2
-13.2 10 0
10.0
Peru -17.2 -8.8 1.8
Turkey -20.8 -17.0 9.5
Indonesia -31.2 -19.5 6.9
South Africa -18.5 -19.2 10.0
Romania 14 9
14.9 35
3.5 15
1.5

Source: HSBC Global Asset Management, Bloomberg, JP Morgan as of 31 December 2013. Past performance is no guarantee of future results. Any forecast, projection or target contained in this
presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets. Forecasted calculations are
based on existing market conditions.

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13
Terms of trade dynamics should support BRL…

USDBRL (inverted), Citibank Brazil Terms of Trade, and Brazil quarterly CA/GDP

Source: HSBC Global Asset Management, Bloomberg, 31 December 2002 – 31 January 2014. Past performance is no guarantee of future results. For illustrative purposes only.

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14
…while we see an improvement in trade balance data

Brazil: Trade balance monthly

Source: HSBC Global Asset Management, Bloomberg, 31 December 2008 – 31 January 2014. Past performance is no guarantee of future results. For illustrative purposes only.

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South African dynamics resemble those of Brazil…

USDZAR (inverted), Citibank South Africa Terms of Trade, and SOAF quarterly CA/GDP

Source: HSBC Global Asset Management, Bloomberg, 31 December 2008 – 31 January 2014. Past performance is no guarantee of future results. For illustrative purposes only.

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16
…and we are seeing the beginning of a turnaround in the trade balance
dynamics
South Africa Trade Balance

Source: HSBC Global Asset Management, Bloomberg, 31 December 2008 – 31 December 2013. Past performance is no guarantee of future results. For illustrative purposes only.

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Indonesia has also benefited from a terms of trade recovery…

USDIDR (inverted), Citibank Indonesia Terms of Trade, and Indonesia quarterly CA/GDP

Source: HSBC Global Asset Management, Bloomberg, 31 December 2009 – 31 January 2014. Past performance is no guarantee of future results. For illustrative purposes only.

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18
…that seems to be supporting the trade balance and reserve
accumulation
Indonesia Trade Balance

Source: HSBC Global Asset Management, Bloomberg, 31 January 2009 – 31 December 2013. Past performance is no guarantee of future results. For illustrative purposes only.

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19
China’s growth stabilization an important factor behind more stable
commodity prices
China Real Annual GDP (yoy%) China Current Account Balance (%GDP)

China crude steel output (metric tons)

y/y %
50 WTO Credit
crisis
40
30
20
10
0
-10
-20
1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
Source: HSBC Global Asset Management, Bloomberg, Real Annual GDP from 31 December 1997 – 31 December 2013. Current Account Balance from 31 December 1990 – 30 September 2013.
China Crude Steel Output source: HSBC Global Asset Management, Datastream, last updated 31 October 2013. Past performance is no guarantee of future results. For illustrative purposes only.

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20
There is value in IG sovereign credit and selected EM currencies

 Total carry and capitalization potential for Investment Grade sovereign credit, and selected
currencies are attractive.

 Main Sovereign hard currency overweights: Brazil, Colombia, Indonesia, South Africa, and
Turkey

 Main Local currency overweights: BRL, INR, IDR, MXN, ZAR, TRY

 Large underweights (zero weights, or short) on B and CCC rated sovereign credits

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21
Important Information

For institutional one on one use only. Not for further distribution.
Important Information

Gross performance information. Performance data is calculated gross of fees and assumes the reinvestment of dividends, income and any capital gains and is net of
transaction costs. The results are shown before the deduction of investment advisory fees and other expenses, which would reduce a return. Information about investment
advisory fees is available in our Form ADV Part 2A, which is available upon request. The following hypothetical illustrates how investment advisory fees, compounded over time,
could impact performance. Assuming a portfolio’s annual rate of return is 15% for 5 years and the annual investment advisory fee is 50 basis points, the gross cumulative five-
year return would be 101.1% and the five-year return net of fees would be 96.8%.
Characteristics
Ch t i ti methodology.
th d l C h equivalents
Cash i l t are d defined
fi d as any security
it with
ith a maturity
t it off lless th
than 1 year. D
Data
t representing
ti regional,
i l sector
t and d quality
lit distribution
di t ib ti
characteristics of the strategy have been calculated after removing cash and cash equivalents and rebalancing the remaining investments to 100%. Average Quality ratings are
based on HSBC methodology and may differ from published sources. The average quality is calculated utilizing a weighted average of each fund's holdings in accordance with
HSBC’s internal methodology, which includes taking the highest rating of S&P, Moody’s or Fitch where available. If a security is unrated, it will be assigned a rating in
accordance with HSBC’s internal methodology. Unrated categories reflect Cash and cash equivalents. Country distribution data reflects the total exposure to a country which
includes local currency exposure. Duration calculations include cash and cash equivalents.
Attribution and Contribution to Returns for the components
p are based on the aggregate
gg g relative p
performance of the underlying
y g holdings,
g , which includes both contributors and
detractors.
Risk Considerations. There is no assurance that a portfolio will achieve its investment objective. In addition, there is no guarantee that any investment strategy will work under
all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Portfolios are subject to
market risk, which is the possibility that the market values of securities owned by the portfolio will decline. Accordingly, you can lose money investing in any of these strategies.
Please be aware that these strategies may be subject to certain additional risks, which should be considered carefully along with the strategy’s investment objectives and fees
before investing. Foreign and emerging markets. Investments in foreign markets entail special risks such as currency, political, economic, and market risks. The risks of
investing in emerging
emerging-market investments Fixed income securities.
market countries are greater than the risks generally associated with foreign investments. securities Subject to credit and interest-rate
interest rate risk.
risk
Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest-rate risk refers to fluctuations in the value of a fixed-income security
resulting from changes in the general level of interest rates. In a declining interest-rate environment, the portfolio may generate less income. In a rising interest-rate environment,
bond prices fall. Credit Quality. Investments in high-yield securities (commonly referred to as “junk bonds”) are often considered speculative investments and have significantly
higher credit risk than investment-grade securities. The prices of high-yield securities, which may be less liquid than higher rated securities, may be more vulnerable to adverse
market, economic or political conditions. Convertibles. Subject to the risks of equity securities when the underlying stock price is high relative to the conversion price (because
more of the security’s value resides in the conversion feature) and debt instruments when the underlying stock price is low relative to the conversion price (because the
conversion feature is less valuable)
valuable). A convertible bond is not as sensitive to interest rate changes as a similar non
non-convertible
convertible debt instrument,
instrument and generally has less potential
for gain or loss than the underlying equity security. Exchange-Traded Fund Risk. Subject to the underlying securities the ETF is designed to track, although lack of liquidity in
an ETF could result in it being more volatile than the underlying portfolio of securities. Disruptions in the markets for the securities underlying ETFs could result in losses on the
Portfolio’s investments. ETFs also have management fees that increase their costs versus owning the underlying securities directly. Derivative instruments. Derivatives can be
illiquid, may disproportionately increase losses and may have a potentially large negative impact on performance. Non-diversification. Focusing investments in a small number
of issuers, industries, foreign currencies or particular countries or regions increases the risks associated with a single economic, political or regulatory occurrence.

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23
Important Information
Index Definitions
These indices are presented to provide you with an understanding of their historic long-term performance, and are not presented to illustrate the performance of any security or
trading strategy. All indices are unmanaged. Index returns do not reflect any fees, expenses or sales charges associated with investing. Investors cannot invest directly in an
index.
The JP Morgan EMBI-Global (EMBIG) Index includes US$-denominated Brady bonds, Eurobonds, and traded loans issued by sovereign and quasi-sovereign entities, and is a
traditional market-capitalization weighted index. The JP Morgan GBI-EM Diversified Index provides a measure of local currency denominated, fixed rate, government debt
issued in emerging markets. Weightings among the countries are more evenly distributed within the diversified index compared to it’s three main composite indices consisting of
the GBI-EM, GBI EM Global, and GBI EM Broad indices. The JP Morgan GBI-EM Global Diversified Index is a comprehensive global local emerging markets index, and
consists of liquid, fixed rate, domestic currency government bonds. The JP Morgan ELMI+ Index is an emerging markets currency (FX) benchmark; the index contains more
countries and also brings in the currency aspect of the market, which is an important component of our strategy. The JPM Corporate Emerging Markets Bond Index (JPM
CEMBI) measures the performance of corporate bonds issued in emerging markets. The CEMBI Broad is a comprehensive version of the CEMBI, and is also available in a
Diversified version, in which weightings are more evenly distributed.

Fi
Firm Di
Disclosure
l
HSBC Global Asset Management is a group of companies in many countries and territories throughout the world that are engaged in investment advisory and fund management
activities, which are ultimately owned by HSBC Holdings Plc. HSBC Global Asset Management is the brand name for the asset management business of HSBC Group. HSBC
Global Asset Management (USA) Inc. is an investment adviser registered with the US Securities and Exchange Commission.
Statistical information pertaining to personnel, as well as assets, may be aggregated in reference to the above-mentioned group of companies including satellite affiliates unless
indicated otherwise. Funds under advice (other than direct management) may comprise assets managed by affiliates of HSBC Global Asset Management, which provide advice
in the form of portfolio construction
construction, sector allocations and / or stock list recommendations
recommendations.
This material has been prepared or is distributed for informational purposes only and is not a solicitation or an offer to buy or sell any security or instrument or to participate in
any trading or investment strategy. All opinions and assumptions included in this presentation are based upon current market conditions as of the date of this presentation and
are subject to change. All investments involve risk including the loss of principal. This presentation contains data compiled from third party sources believed to be reliable, but the
accuracy of such data has not been verified.
This information has been prepared for informational purposes only, and is not intended to provide and should not be relied on for accounting, legal or tax advice.
You should consult yyour tax or legal
g advisor regarding
g g such matters.
Any portfolio characteristics, including position sizes and sector allocations among others, are generally averages and are for illustrative purposes only and do not reflect the
investments of an actual portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size,
nature and risk from those shown. The investment processes, research processes or risk processes shown herein are for informational purposes to demonstrate an overview of
the process. Such processes may differ by product, client mandate or market conditions.
Investors should carefully consider the investment objectives, risks and fees of the strategy carefully before investing. A separately managed account may not be
suitable for all investors and a minimum asset level is required. Please refer to the Form ADV Part 2A for important information about the investment manager.
The products and/or services discussed are: Not a deposit or other obligation of the bank or any of its affiliates; Not FDIC insured or insured by any federal government agency
of the United States; not obligations guaranteed by the bank or any of its affiliates; and are subject to investment risk, including possible loss of principal invested.
Past performance is not indicative of future performance. Information is for institutional or qualified investors only.
© Copyright 2014. HSBC Global Asset Management (USA) Inc. All rights reserved.
CA 14-02-59

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24
Appendix

For institutional one on one use only. Not for further distribution.
Emerging Market Debt capabilities

Emerging Markets Debt – Core EMD – Total Return EMD Local Debt (Blended) EMD – Local Debt

Launch date 1998 1999 2007 2011

Investment universe
Predominantly emerging market hard
currency sovereign and quasi-
sovereign debt; tactical use of
emerging market hard currency
corporate debt as well as emerging
market local sovereign debt and
currencies
Predominantly hard currency
emerging market sovereign, quasi-
sovereign and corporate debt as well
as emerging market local sovereign
debt and currencies
Predominantly emerging market local
currency sovereign debt and
currencies; blended benchmark
widens the investment universe while
reducing duration
Predominantly emerging market local
currency sovereign debt as well as
emerging market currencies

Comparative index* JPM EMBI Global Benchmark agnostic, flexible 50% JPM GBI-EM Global Diversified/ JPM GBI-EM Global Diversified
approach to the various opportunities 50% JPM ELMI+
available in emerging markets

Assets under $7,474.5 million $4,045.3 million $1,184.7 million $366.8 million
management (US$)

Regional exposure Average number of countries: 40-60 Average number of countries: 15-35 Average number of countries: 15-25 Average number of countries: 15-25
B
Benchmark
h k concentration
t ti ((~70%)
70%) in
i Fl ibl region
Flexible i exposure B
Benchmark
h k concentration
t ti ((~70%)
70%) ini B
Benchmark
h k evenly
l di
distributed
t ib t d through
th h
Latin America and Eastern Europe Asia and Eastern Europe Asia, Europe and Latin America

Ratings quality Average credit quality: BBB Average credit quality: A- Average credit quality: A Average credit quality: A-
exposure

Average duration +/- 1 year of benchmark (6.76 yrs) Flexible +/- 2 year of benchmark (2.40 yrs) +/- 2 years of benchmark (4.79 yrs)

Target risk and return** Target tracking error: 1.5 – 4.0% Seeks to deliver 50-75% of the Target tracking error: 1.5 – 4.0% Target tracking error: 1.5 – 4.0%
Target information ratio of 0.75 – 1.0 volatility associated with emerging Target information ratio of 0.75 – 1.0 Target information ratio of 0.75 – 1.0
market external debt, local debt and
currencies indices

Source: HSBC Global Asset Management. As of 30 September 2013. Any objectives, expectations, and targets presented are indicative only, are not guaranteed in any way, and do not constitute any
engagement on the part of HSBC Global Asset Management. HSBC Global Asset Management accepts no liability for any failure to meet these objectives, expectations, and targets. Please see
important disclosure at the end of this presentation for benchmark definitions and calculation methodology for characteristics.
* These indices are for comparison purposes only.
** Expected volatility herein is provided for illustrative purposes only. These expectations are based on volatility of the benchmark over a cycle, and then the overall objectives of the portfolio such as the
targeted level of volatility for the strategy and the overall out performance target, the outputs from the risk budgeting process (i.e expected tracking error), the risk profile of the investment strategy. These
ranges are against the observed benchmark volatility.

For institutional one on one use only. Not for further distribution.
26
Emerging Market Debt capabilities

EMD Corporate (Unconstrained) EMD Investment Grade EM Inflation Linked Bond

Launch date 2010 2010 2012

Investment universe
Predominantly emerging market hard
currency corporate debt; tactical use of
emerging market hard currency
sovereign and quasi-sovereign debt
Predominantly emerging market hard
and local currency sovereign debt as
well as hard currency quasi-
sovereign debt; tactical use of
emerging market hard currency
corporate debt
Predominantly Emerging market
local currency sovereign inflation-
linked debt and currencies; tactical
use of emerging market hard
currency nominal debt

C
Comparative
ti iindex*
d * JPM CEMBI Di
Diversified
ifi d 50% JPM EMBI Gl
Global
b l IG Barclays
B l E
Emergingi M Markets
k t
50% JPM GBI-EM GD IG Tradable Inflation-linked Bond

Assets under $12.1 million $1,117.0 million $161.3 million

management (US$)

g
Regional exposure
p Average
g number of countries: 20-50 Average
g number of countries: 15-30 Brazil,, Mexico,, Turkey,
y, Israel,, S.
Benchmark concentration (~70%) in evenly distributed through Asia, Africa, Korea, Thailand, Poland,
Latin America and Asia Europe and Latin America Chile

Ratings quality Average credit quality: BBB Average credit quality: A- Average credit quality: A-
exposure

Average duration +/- 2 year of benchmark (5.68 yrs) +/- 2 year of benchmark (6.06 yrs) +/- 2 years of benchmark (7.64 yrs)

Target risk and return** Target tracking error: 1.5 – 4.0% Target tracking error: 1.5 – 4.0% Target tracking error: 1.5 – 4.0%
Target information ratio of 0.75 – 1.0 Target information ratio of 0.75 – 1.0 Target information ratio of 0.75 – 1.0

Source: HSBC Global Asset Management. As of 30 September 2013. Any objectives, expectations, and targets presented are indicative only, are not guaranteed in any way, and do not constitute any
engagement on the part of HSBC Global Asset Management. HSBC Global Asset Management accepts no liability for any failure to meet these objectives, expectations, and targets. Please see
important disclosure at the end of this presentation for benchmark definitions and calculation methodology for characteristics.
* These indices are for comparison purposes only.
** Expected volatility herein is provided for illustrative purposes only. These expectations are based on volatility of the benchmark over a cycle, and then the overall objectives of the portfolio such as the
targeted level of volatility for the strategy and the overall out performance target, the outputs from the risk budgeting process (i.e expected tracking error), the risk profile of the investment strategy. These
ranges are against the observed benchmark volatility.

For institutional one on one use only. Not for further distribution.
27
 Long-term case for emerging markets credit is strong

Emerging markets sovereign balance sheets have strengthened substantially over the last ten
years

Emerging vs. Developed market current accounts Emerging Markets Foreign Currency Reserves
(Data forecasted to year-end 2013) (Data forecasted to year-end 2013)

9000
e (US$ billions)

800
8000
600
7000
400 6000

ns
Currrent account balance

US$ billion
200 5000
0 4000

-200 3000

-400 2000

-600 1000
1980 1984 1988 1992 1996 2000 2004 2008 2012
0
1980 1985 1990 1995 2000 2005 2010
Advanced economies Emerging market and developing economies

EM International Reserves

Source: IMF
IMF, HSBC Global Asset Management
Management. Data as of October 2012 2012. Any forecast
forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in
any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets. Review and outlook is subject to change without notice. Past performance is no guarantee of future
results.

For institutional one on one use only. Not for further distribution.
28
Cheap currencies are supported by inflation adjusted productivity
growth differentials vs. USD and EUR

Real exchange rate appreciation potential

EM currency under/overvaluation relative to US$
8,0
80
EUR
Inflation adjusted productivity differential
6,0
JPY

Productivity differential* (% p.a.)

ILS 4,0
UYU
BRL
2,0
SGD 0,0
CLP
RUB -2,0
KRW
-4,0
HKD US vs EM
MXN -6,0
EU vs EM
IDR
-8,0
CNY
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
COP
CZK
200 Cumulative productivity change (vs. Developing world)
HUF
RON 190
TRY
180 EM Productivity Index
PLN US Productivity Index
MYR 170
EURO Z
Zone P
Productivity
d ti it IIndex
d
PEN
Basis points

160
PHP
THB 150
ZAR 140
ARS
TWD 130
UAH 120
EGP
INR
110

100
-80% -60% -40% -20% 0% 20%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
* The difference between the EM Productivity Index and the US Productivity Index adjusted for inflation.
Source: IMF, WEO, EIU, HSBC Global Asset Management. g EM currency
y valuation data as of 02 July
y 2013. Productivity
y data as of April
p 2011. Data beginning
g g Mayy 2011 is forecasted data. Past
performance is no guarantee of future results. Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no
liability for any failure to meet such forecasts, projections or targets.

For institutional one on one use only. Not for further distribution.
29
Emerging Markets Debt – Total Return
Supplemental GIPS report

Report To 31 January 2014

Past performance is not indicative of future performance

performance. Returns greater than one year are annualized.
annualized Data is supplemental to the GIPS® compliant presentation on the following pages
pages. Please
see “Important Information” concerning the impact of investment advisory fees and expenses on performance and for benchmark definitions.

For institutional one on one use only. Not for further distribution.
30
Emerging Markets Debt – Total Return
GIPS report

Report To 30 September 2013

Past performance is not indicative of future performance

performance. Returns greater than one year are annualized.
annualized Please see “Important
Important Information
Information” concerning the impact of investment advisory fees and
expenses on performance and for benchmark definitions.

For institutional one on one use only. Not for further distribution.
31
Emerging Markets Debt – Total Return
Disclosures

HSBC Global Asset Management (the Firm) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS
standards. The Firm has been independently verified for the periods 1 January 2006 through 31 December 2012. The resultant verification report is available upon request. Verification assesses
whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate
and present performance in compliance with the GIPS standards.
standards Verification does not ensure the accuracy of any specific composite presentation.
presentation
The composite creation date is 31/08/2006
A complete list and description of all Firm composites, as well as additional information regarding policies for calculating and reporting returns, is available on request from the contact shown on the
document or presentation to which this report is attached.
Prior to 2011 HSBC Global Asset Management maintained eight distinct GIPS Firms. The Firms were defined by legal business entity. All existing group Firms were thereafter amalgamated into a
single global Firm definition. Historical performance shown prior to January 1, 2006 reflects the performance of a legacy Firm GIPS composite.
HSBC Global Asset Management (the Firm) consists of discretionary accounts and sub-accounts managed as discrete mandates within specified local HSBC Global Asset Management entities. The
Firm comprises the following: HSBC Global Asset Management (Deutschland) GmbH GmbH, HSBC Global Asset Management (Hong Kong) Limited Limited, HSBC Global Asset Management (USA) Inc., Inc HSBC
Global Asset Management (France), HSBC Global Asset Management (Canada) Limited, and HSBC Global Asset Management (UK) Limited. The Firm excludes portfolios and funds managed by
the Alternative Investments teams, LDI products, French regulated employee (FCPE) schemes, and private client accounts as these products operate under a materially different philosophy and
process and/or regulatory environment.
The Emerging Markets Debt - Total Return composite consists of only actual, fee paying, fully discretionary accounts managed by HSBC Global Asset Management (USA) Inc. The underlying
strategy is not constrained by benchmark and may hold long and short positions in emerging market fixed income, equities, currencies, and other financial instruments. Given the strategy¿s absolute
return orientation, cash may be actively used as a defensive tactic to protect principal. The base currency of the composite is US$. Investment results are measured against the Merrill Lynch 3
month LIBOR Constant Maturity Index.
Performance returns are calculated gross of investment management fees and other non-trading related expenses.
The performance presented in this composite report is calculated net of unreclaimable withholding taxes.
Warnings: The historical performance presented in these reports should not be seen as an indication of future performance; The value of your investment and any income from it can go down as
well as up. Where overseas securities are held the rate of exchange may cause the value of the investment to go down as well as up.Investors should also be aware that other performance
calculation methods may produce different results, and that the results for specific portfolios and for different periods may vary from the returns presented in these reports; Comparisons of
investment returns should consider qualitative circumstances and should be made only to portfolios with generally similar investment objectives. In the USA, this information is intended for use solely
in one-on-one presentations.
Significant Event - Atlantic Advisors: Atlantic Advisors was acquired by HSBC Investments (USA) Inc Inc. in June 2005
2005. The members of Atlantic Advisors are now the global emerging markets fixed
income team at HSBC Global Asset Management (USA) Inc. (formerly HSBC Halbis Partners (USA) Inc.). The composite performance results represent historical composite returns produced by the
global emerging markets fixed income team while employed at the previous advisor linked, pursuant to GIPS Guidelines, with the performance results produced by the global emerging markets fixed
income team since joining the firm.
Exchange Rates The exchange rates used by accounts in this composite may be different than those used by the benchmark.
The management process for accounts in this composite uses leverage and short sales instruments as a source of potential return. The firm also may employ the following derivative instruments
both for hedging and return enhancement purposes; Options on Securities & Securities Indices, Currency transactions, Repurchase agreements, Interest rate swaps, caps, floors, and collars, and
Forward contracts on securities or currencies. The firm also reserves the right to use new derivative techniques and instruments that may be developed in the future.
Usage of Pre 2000 data The performance for periods presented prior to 1 January 2000 is not GIPS compliant as not all funds managed by the Firm have been allocated to composites for these
periods. All funds which are eligible for inclusion in this composite have been included in the performance shown.
Less than $200 million: 0.75% flat fee with a 20% annual performance fee (net of the base fee) above the relevant money market rate.
Over $200 million: 0.50% flat fee with a 20% annual performance fee (net of the base fee) above the relevant money market rate.

For institutional one on one use only. Not for further distribution.
32