We believe that three features of the general, western economic crisis of the 1970s are relevant to current conditions both in the gold market and in the wider US economy. First, it heralded a period of significant volatility in real interest rates that lasted until December 1981. During this time, the gold price materially re-based itself from US$315/oz in August 1979 (when real interest rates were -0.438%) via US$382/oz in October 1979 (when real interest rates were 3.428%) to US$653/oz in January 1980 (when real interest rates were 0.091%). Second, the gold price did not peak until real interest rates attained a level of 4% on a sustainable basis in November 1980. This level of real interest rates not having remotely been reached and the Fed now seemingly pausing its tightening cycle, we believe that the gold bull market remains intact and that, while it is possible to predict a lower gold price in the next few years (down to US$1,126/oz if latent inflationary forces fail to come through and 2029 becomes the analogue of 1985), in the shorter term a number of our analyses demonstrate that a price in excess of US$3,000/oz is a realistic possibility and that one of US$4,500/oz is an outside possibility. Our updated gold price forecasts are shown in Exhibit 13 on page 8 of this report.

Rising demand for alternatives to broad-spectrum conventional pesticides is driving investment in the development of environmentally friendly biological crop protection products that support sustainable agriculture. This report reviews the background to this growth and discusses some of the novel techniques being deployed, including RNA interference (RNAi) and individual companies engaged in development and commercialisation.

BayWa is an international trading company operating in the fields of energy, agriculture and building materials. In this thematic report, which is the sixth in a sequence of short notes and interviews about BayWa, we explore how the company’s heavily diversified business activities in relatively defensive markets and its international reach limited the impact of the coronavirus pandemic on performance during FY21 and enabled BayWa to report record levels of EBIT.

BayWa is an international trading company operating in the fields of energy, agriculture and building materials. In this thematic report, which is the fifth in a sequence of short notes and interviews about BayWa, we explore how the company’s building materials segment is responding to the need for the construction sector to adopt more environmentally responsible practices.

BayWa is an international trading company operating in the fields of energy, agriculture and building materials. In this thematic report, which is the fourth in a sequence of short notes and interviews about BayWa, we examine how the company’s agriculture segment is evolving in response to the need to feed a growing global population while adopting more sustainable farming practices. The review includes both initiatives that help farmers produce crops more sustainably and initiatives that help farmers mitigate the adverse impacts of climate change.

BayWa is an international trading company operating in the fields of energy, agriculture and building materials. In this thematic report, which is the third in a sequence of short notes and interviews about BayWa, we examine how BayWa’s energy segment is evolving in response to society’s shift away from fossil fuels. The review includes both BayWa’s strategic investment in renewable energy related activities and numerous environmentally friendly new products launched by the group’s conventional energy business.

BayWa is an international trading company operating in the fields of energy, agriculture and building materials. In this thematic report, which is the first of a sequence of short notes on BayWa, we examine how the group is able to make a major contribution to limiting the effects of climate change by adapting both its strategy and internal operating processes. These adaptations help BayWa, its customers and its suppliers reduce their negative effect on climate change and their exposure to the potential impact of climate change. The group’s emphasis on a more sustainable business model is also helping it secure green investment, which is accelerating the growth of BayWa’s renewable energy business, creating a virtuous circle.

Despite the pandemic weighing heavily on demand, the helium market remains under-supplied in 2021, as it has been since 2018. From 2022, significant additional supply should enter the market from Qatar and Russia which could see the start of a significant loosening of the market. By 2026, these two countries alone could add 3.8bcf/year to global supply, causing >20% oversupply out to 2030, based on 2% pa demand projections. We would expect significant pricing pressure by the mid-2020s unless demand surprises on the upside. For security of supply, it is concerning that by the late 2020s, 75% of global helium supply will come from Qatar, Russia and Algeria (up from 50% in 2020). Some customers may be willing to pay a premium to secure supply of helium from outside of these three countries.

ProCredit (PCB) is a Germany-based group operating  regional banks across Southeastern and Eastern Europe, as well as in Ecuador. The banks focus on SMEs and private middle-income and high earners. At end-September 2020, the group’s total assets stood at €7.1bn. ProCredit has extensive experience in supporting small and medium-sized enterprises (SMEs) in emerging economies, with a focus on Southeastern (SEE) and Eastern Europe (EE) and banking operations in Ecuador. PCB aims to positively contribute to the economic, social and environmental situation in these regions regions and create shareholder value in the process. This has been supported with a dynamic growth of its green loan portfolio (CAGR of 34% in 2016-2019), prudent credit, social and environmental risk management as well as long-term oriented approach to its clients and staff. PCB’s environmental, social and governance (ESG) efforts are reflected in its outperformance vs peers in the ESG scoring system that we have applied. Edison’s ESG Edge analysis aims to move away from historical data and focus on forward looking drivers and indicators. Our methodology starts by grounding our work through the analysis of the data points of other data providers and ratings agencies’. Our ESG Edge scores are derived in collaboration with our partner Rebalance and follow the guidelines of the Sustainable Accounting Standards Board (SASB) and use the Cambridge Impact Framework. We follow this up with management and employee interviews to validate our findings and get to the narrative behind the data. Our findings are condensed in this report to focus on key ESG drivers, transition opportunities and risks for the company. Please see our website for a more detailed overview of our methodology.

Age-related macular degeneration (AMD) remains the leading cause of blindness in older adults in western countries. While neovascular AMD (NVAMD, or wet-AMD) can be controlled in most cases with recurring anti-vascular endothelial growth factor A (VEGF-A) intravitreal injections (IVT), there is a substantial unmet need for those with the dry form of the disease (whose prevalence is about six- to nine-fold higher), particularly those who develop geographic atrophy (GA). There also remains a need to improve NVAMD treatments, as recurring IVT injections are burdensome, and about a third of patients will become refractory to anti-VEGF-A over time. This report provides an updated overview of many of the leading candidates and technologies that will shape the AMD market in the coming decade. We expect that while not all of these products will be successful, those that are could potentially generate significant returns for investors.

While many companies have tapped the equity markets for money since the start of the pandemic, the process of recapitalisation has only just begun. The needs of most are currently unmet and, as at September 2020, it is far from clear that supply will match demand over the next six to 18 months.

Small satellites, ie those weighing less than 500kg, are increasingly being deployed to provide internet connectivity to remote and rural areas, to provide environmental monitoring services and to track assets. Widespread deployment requires changing the paradigm from expensive, bespoke satellites to platforms and payloads that can be manufactured and launched in their thousands. This report explores the drivers behind this revolution and profiles several of the key-players.

The games industry is a rare example of a sector set for a good crisis. With billions of extra leisure hours available daily and quick adjustment to distributed working, many games developers and publishers are seeing strong revenue and margin growth. In this report, we compare business models across geographies and look at how different segments of the market may be affected by the COVID-19 pandemic. The general pre-crisis backdrop was a sector forecast to grow at c 8.4% (2019–22), reaching a total market size of $190bn by 2022. Mobile gaming offers a low double-digit revenue CAGR, while PC and console gaming offer single-digit growth as we move towards console transition this year. In the first few months of the year, business disruption was mainly confined to China and the Far East, with concerns over supply chains and stock levels to the fore in the West. Since then, the reality of a global COVID-19 pandemic has emerged, with more than a third of the global population in lockdown today. The transition from offices to remote working has caused significant business disruption, but for most games companies the disruption has been effectively managed with business continuity plans now largely implemented. Looking ahead, we expect consumers will be isolated from normal activities and other forms of entertainment for at least three to six months; while it lasts, this period will provide a substantial benefit for games companies. Although the virtual reality industry might suffer supply issues and console launches will be softer (initially), the net effect of the pandemic is set to be sector positive. The small-cap European games sector offers exposure to a number of well-run, innovative businesses, with recurring revenue models that will benefit from increased consumer demand fulfilled digitally. The following companies are featured in the research: 11 bit studios, Astralis, Bigben Interactive, CD Projekt, Codemasters, Digital Bros, Embracer, Focus Home, Frontier Developments, G5 Entertainment, Gfinity, MTG, Nacon, Paradox Interactive, PlayWay, Remedy Entertainment, Rovio Entertainment, Starbreeze, Stillfront Group, Sumo Group, Team17 and Ubisoft Entertainment.

The use of distributed ledger technology (DLT) looks set to disrupt the financial services industry through the emergence of a new asset class and its use to improve business processes. The early years of growth in digital assets largely involved virtual currencies, dominated by retail investors, and early issuance of digital securities was driven by start-ups. As regulation brings certainty to the sector and security and scalability concerns are addressed, we are now seeing concerted investment by major companies and we expect to see institutional adoption accelerate. In the longer term, as well as opportunities from asset tokenisation, we see threats to traditional financial services businesses as the role of intermediaries evolves.

The abrupt fall in Chinese electric vehicle (EV) sales in Q3 has disrupted the lithium-ion battery supply chain and reset valuations. This gives investors the opportunity to reassess the long-term buy case. We believe batteries will play a critical role in the future of the transport and power industries. Investors have numerous options to play this growth in the automotive, chemical/industrial, transport and electricity sectors.

A very warm welcome to the Edison conference book for the Deutsches Eigenkapitalforum 2019. Following a record year for IPOs in 2018, this year has been rather disappointing so far. Year-todate values are down by 40% in Europe compared to 2018. The picture is similar in Germany. Moreover, IPO performance is not very encouraging, with each of the four IPOs in Germany trading below issue price. However, TeamViewer’s listing on the Frankfurt Stock Exchange provides one of the few bright spots in the IPO environment in the third quarter, putting Deutsche Börse first in Europe with regard to issue volume. From a German perspective, it is very pleasing that the domestic exchange can support large tech IPOs. With a number of IPOs being cancelled or postponed, the market is already looking ahead to next year. At this point, 2020 could be a very successful year for new listings, with several landmark transactions in the pipeline like Continental Powertrain, Siemens Energy and Wintershall DEA. Needless to say, all this depends on the global economic environment. Equity markets are clearly buoyed by politics at present. Looking at the factors driving markets and sentiment, it is striking that many are the same as last year. Brexit has not been resolved and trade disputes continue. Investors have been factoring a risk premium into asset prices for those political developments for more than a year.

‘Even today, the importance of gold in the international monetary system is reflected in the fact that it is today the only commodity held as reserve by the monetary authorities, and it constitutes the largest component after dollars in the total reserves of the international monetary system.’ Robert A Mundell, Nobel Laureate for Economics, 1999.

The re-emergence of a listed small- and mid-cap games sector across Europe owes much to the disruption from digital distribution, GaaS and the implementation of more capital light, recurring monetisation models. Over the next few years, increasing investment in next-generation consoles, streaming, subscription, eSports and VR/AR will lead to a proliferation of routes to market for IP, and these drivers look set to support industry growth for the next 10 years. The dynamic nature of the market will continue to create disruption, rewarding agile development but challenging legacy business models. This offers opportunities (particularly to IP owners) as well as risks, but we believe that the small- and mid-cap European sector now offers exposure to well-run, innovative businesses that will benefit from the continuing growth of the digital model.

The global online gaming market generated c £40bn of gross gaming revenues (GGR) in 2018 and newly regulating markets (the US) are expected to contribute to 7% CAGR to 2023 (according to H2 Gambling Capital (H2GC)). However, while regulated markets have provided significant opportunities for operators to date, government intervention remains a constant threat and legislation is tightening. Some mature markets (notably the UK) have been raising taxes and implementing regulatory burdens, which increases the cost of business. In our view, success will depend on a combination of scale, diversification, proprietary technology and a strong balance sheet. Many of the 12 operators in this report should benefit from these dynamics and sector valuations remain attractive, at 12.6x P/E, 8.2x EV/EBITDA and 6.0% dividend yield for FY19.

The cannabis sector is relatively broad, spanning FDA-approved drugs to consumer products. Both markets are still at a fraction of their potential peak sizes due to laws forbidding the use of cannabis and also regulatory hesitance to approve drugs with related active ingredients. Worldwide sales for all regulator-approved cannabinoid therapeutics were only $53m in 2018 while the total legal cannabis market in the United States was only around $8bn in 2017 compared to $234bn in sales for the alcoholic beverage industry. However, things are changing, mainly due to two reasons: legalization is popular with voters and politicians recognize that the tax revenue that could be extracted through sales taxes/VAT could fill budgetary holes.

Over the past two to three years, we have seen the re-emergence of a listed small- and mid-cap games sector in the UK and Europe, with a wave of IPOs supported by a period of sustained outperformance of the industry majors against a backdrop of healthy equity markets. The more recent reversal of performance of the sector has been equally dramatic and largely indiscriminate. Mixed trading results from the industry majors reflect, in our view, the re-basement of expectations from unrealistic highs, as well as disruption from digital distribution and recurring monetisation models. The small-cap games sector mainly comprises companies with business models designed to exploit this new model, and trading for the most part has been robust. The dynamic nature of the market will continue to create disruption, offering opportunities and risks, but we believe the small-cap European sector now offers exposure to a number of well-run, innovative businesses and good execution will generate significant value.

The CEOs of seven big pharmaceutical companies recently appeared before Congress to discuss the prices they charge for their drugs. Their appearance comes at a time when President Trump and members of Congress continue to raise the issue of high drug prices. In this report we seek to add a little clarity on this area which is both complex and likely to remain an issue throughout the 2020 US presidential campaign.

2018 has seen a notable tightening in the helium market, driven by lower than expected global output and potential supply deferments. Forecasting remains difficult, but we believe that the balance is weighted towards a tightening market, especially in the short term ahead of new large-scale supply additions from mega projects in Qatar and Russia, which are planned from 2020 onwards. Assumed annual demand growth of 1.5% will continue to put pressure on the supply/demand balance in the longer term. This should support prices, motivating further development and helium exploration. If mega projects are delayed (very possible), the picture could deteriorate further, pushing the market into a substantial deficit.

The practice of medicine can be roughly divided into two specialties: the diagnosis of disease and the treatment of disease. Historically, healthcare investing has been focused on treatment, with pharmaceutical and biotech companies commanding the majority of attention. However, diagnosis remains a significant opportunity for the informed investor. Diagnostic products are pervasive in the healthcare system and as varied as the diseases the humans encounter. This report provides an overview of both the diversity and the commonalities in this market.

In Edison’s latest annual global mining sector report, Gold Stars and Black Holes – Analysing the Discount: from Resource to Sanction, we analyse how differentiated in-situ values for mineral resources across all the major equity markets have evolved, and how equity valuations then increase (or not) as projects are developed through to sanction. The report concludes that equity markets are generally supportive of junior exploration companies (with some key exceptions where demand is uncertain) and markets in general appear to be somewhat less risk averse than they have been in previous years. In contrast, the valuation challenges of early stage development companies first identified in our 2017 global sector report remain and if anything equity markets have become more difficult for junior development companies to navigate. Finally, for the first time Edison has used its extensive database to derive potential screening tools for investors to quickly derive expected equity valuations for a wide range of potential mining opportunities based on net present value grade, IRR, size, jurisdiction, discount rate and product.

From 1 July 2018, the UK’s financial regulator, the Financial Conduct Authority (FCA) introduced new provisions on the availability of information in the UK equity main market IPO process. The changes are intended to improve the range, quality and timeliness of information made available to the market and, in particular, to restore the centrality of the registration document or prospectus in the overall process. The reforms affect the order in which information is released to the market, with the registration document or prospectus now published ahead of the Intention to Float (ITF). Furthermore, issuers who brief the syndicate analysts are required to invite or hold a second briefing for unconnected analysts or, as a minimum, share all information given to connected analysts with unconnected analysts. This means the entire IPO process is played out in the public domain, opening it up to a wider group of potential investors (and wider market commentators). A separate Conduct of Business Sourcebook (COBS) provision also puts new restrictions on investment banks, which will no longer be able to wall cross in-house analysts during the beauty parade for advisory mandates. The reforms require equality of information between connected and unconnected analysts, and change the timing of when research can be issued to the market. We can provide unconnected research services across the entire IPO process, from initial preparations through to a first day of dealings report. Our research reaches the whole market, including retail investors, as it is MiFID II compliant, being free of charge to all readers.

Regulated by Borsa Italiana, AIM Italia is dedicated to dynamic and competitive small and medium-sized enterprises (SMEs) that are looking for capital to finance their growth plans. AIM Italia offers companies visibility and a better standing, encourages best practice, supports internationalisation and attracts new talent. This book highlights 26 of the companies presenting at the Borsa Italiana AIM Italia Conference in London on 22 October 2018. For further information about the conference and registration please email Borsa Italiana or Edison.

After many months of procrastination, the UK government has finally delivered a verdict on the fixed odds betting terminals (FOBTs), reducing stake limits from £100 to £2. Although not entirely a surprise, this is a disappointing result for the industry and will likely entail more than 3,500 shop closures. Also, while a decision has been made, there is still much uncertainty regarding timing and implementation. For online operators, there is a further blow, in the form of potential increases in gaming taxes at the next budget. This confirms recent speculation and is now widely expected to increase from 15% to 20%.

The oil sector is firmly in a new cycle, with a dramatically lower cost profile across the industry. Inventories in the US remain at elevated levels (only just below last year’s record levels). Although demand growth is steady, the production growth from the US shales alone is seen to be enough to provide for this growth from (Q217-Q218), with OPEC playing a role as the swing producer to cover seasonal variation. The market agrees, and the forward curve has progressively lowered and flattened over the last 18 months. We lower our long-term oil price assumption to $70/bbl in 2022 (equivalent to c $60/bbl real in 2016).

Edison attended the 2017 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago, US, on 2-6 June. This year the main focus was chimeric antigen receptor (CAR) T Cell therapies, in particular CARTs targeting BCMA from Bluebird Bio and Nanjing Legend; and immuno-oncology (IO) combinations such as IDO1/PD-1 inhibitors and new targets like LAG3 and GITR. Targeted therapies also took centre stage, particularly Loxo’s larotrectinib and AstraZeneca’s Lynparza, along with Roche’s APHINITY data. Finally, we also present data from companies under our coverage: Hutchison China MediTech, MorphoSys, PharmaMar, Prima Biomed and Viralytics.

Voice is where much excitement and hype is to be found. Every ecosystem is developing a voice controlled digital assistant with which it hopes to enrich Digital Life and control the homes of its users. However, we find that voice suffers from significant limitations meaning that the user experience and functionality that it can offer is inferior to what can be achieved using a visual device. This combined with the fact that the intelligence of voice based systems remains rudimentary at best means that voice is unlikely to replace screens any time soon.

The difference between men and boys will be the brains of their toys. Artificial intelligence (AI) promises to substantially improve the Digital Life services offered by the ecosystems that has underpinned a period of feverish investment. Despite this activity, developments are at a very early stage with none of the big challenges of AI being close to being solved. It is the search engines that are ahead in AI followed by Apple, Microsoft and Amazon. AI remains the Achilles’ heel of Facebook.

Low to zero device growth means that revenue is becoming increasingly critical to the ecosystem. Edison’s new monetisation model benchmarks ecosystems that monetise via advertising and subscription and facilitates the comparison with those that monetise through hardware. Although Google has benefited from iOS’s recent strength, there are real cracks appearing in its ecosystem that need to be addressed urgently. Elsewhere, Twitter remains gridlocked, while Yahoo fails to execute. Facebook has the most potential.

On 30 November 2016, OPEC and select non-OPEC oil exporters agreed to cut output by a combined 1.76mmb/d in 2017, prompting us to review our short-term oil price assumptions. OPEC views this as a necessary catalysis of the rebalancing process to secure medium-term oil supply and the role of crude oil within the global energy mix. Assuming OPEC’s 14 members (OPEC-14) and Russia comply with >70% of pledged output reductions in early 2017, we expect global inventories to fall in Q217, reaching the top of their five-year range by the end of 2017. We estimate that OPEC compliance will accelerate crude oil inventory draws by around six months from earlier IEA forecasts (November 2016 oil market report). We maintain oil price assumptions in line with the EIA at $51.7/bbl in 2017, rising to $70/bbl (real) long term – minor adjustments from our forecasts in June 2016.

In the first part of a series of reports on listed private equity (LPE), we examine the key opportunities and issues for investors.

Oil price volatility remains high, with Brent crude having risen $17/bbl or 51% since our last macro outlook in January 2016. Since then we have seen supply affected by a 1.2mmbpd reduction in Canadian output due to wildfires, combined with underinvestment and instability-driven supply interruptions across OPEC members Venezuela, Libya and Nigeria. Some of these temporary supply effects will reverse over the coming months; nonetheless, we expect the oil market to tighten over 2016. Although record levels of inventory and uncertainty over the sustainability of emerging market demand growth may limit near-term price gains, longer term, we expect prices to rise to c $70/bbl in line with levels required to incentivise non-OPEC supply expansion. Our short-term oil price assumptions remain aligned to EIA STEO forecasts at $43/bbl Brent in 2016 and $52/bbl in 2017.

Launch of Mining Research Principles Edison prides itself on the quality, consistency and robustness of its research. At the heart of its mining research are principles that ensure that our coverage is insightful, accurate, comparable and relevant to all investors interested in the global mining industry. Today we are publishing for the first time a comprehensive document that takes readers through the processes and principles we apply to our mining research, which in turn ensures our coverage consistently meets the standards investors and companies expect of us. We hope you enjoy reading this important document and we welcome all comments.

The oil markets have been in turmoil now for 16 months, with January 2016 trading the most tumultuous we have seen in years. Crude prices have plummeted to levels not seen since mid-2004 and both slowing Chinese demand growth and Iranian exports are weighing heavily on the market. We align our short-term forecasts to the EIA, which does not expect a reversal in inventory builds until H217. This reduces our forecasts for Brent in 2016 and 2017 to $40/bbl and $50/bbl respectively. Longer term, a fundamental shift in costs is likely to result in a lower break-even for marginal cost producers; this sets the base for our long-term oil price assumption. As a result, we reduce our long-term Brent assumption from $80/bbl to $70/bbl.

The stage is set for a firming price trend. The oil market has been in hefty surplus in 2015. This contributed to light crude prices plumbing six-year lows and falling below long-run marginal costs. However, we believe a market transformation is underway, led by sharp cutbacks in capex and recovering demand. Significantly, US production is now trending decisively down after the resilient showing in H115. We expect this trend to gather pace in the coming months and contribute to declines in non-OPEC output in 2016 and 2017. After a lacklustre fourth quarter, we see scope for firming prices in 2016-17 as evidence of market tightening becomes increasingly apparent. Despite a more cautious stance in October over global supply/demand balance, the oversupply situation is nowhere near as loose as a year ago. In the medium term, shale oil development and the Saudis’ desire to head off competition from renewables will probably keep prices well below the highs of 2011-14.

The days of walled gardens have passed and users can now come and go as they please. This results in users being able to pick and choose the services they want from different ecosystems. Our analysis clearly indicates the number of services that a user takes from any one ecosystem will have a non-linear impact on the amount of value that the ecosystem owner can extract in the long term. The iPhone 6 has allowed the iOS ecosystem to extend its lead over principal competitors Google and Microsoft. Facebook and Xiaomi are the two emerging players that warrant close observation.

The annual American Society of Clinical Oncology (ASCO) meeting traditionally provides a snapshot of the most exciting clinical programs and science in the field of oncology, a disease category where around 40% of biopharmaceutical research is focused. After three and a half days of clinical/scientific presentations and conversations with key opinion leaders and community oncologists, you get a great sense of where the treatment of cancer is headed.

Edison Investment Research is delighted to be working with ASX on its upcoming Spotlight Conferences in Singapore and Hong Kong on the 26 and 28 May. Below please find a link to the report Edison has produced for the event. It features profiles for each of the participating companies. We would like to thank ASX and the companies involved for their cooperation.

Edison’s Oil and Gas team has a great deal of knowledge in the sector, with decades of cumulative experience on the buy side, sell side as well as technical and management roles in industry.

Since the 2015 first quarter lows, light crude oil prices have risen by around 30% despite inventories rising to record levels. Rather than inventories, the market has chosen to focus on one of the sharpest drops in the US rig count on record and the potential for a weakening US production trend in the coming months. While the lows for this cycle have probably been seen, we believe the price trend could soften near term reflecting hefty inventories and buoyant OPEC supply. The issue of Iranian exports could also weigh on prices ahead of the end June deadline for a final agreement between the world’s major powers and Iran over its nuclear programme. Looking at the balance of 2015, however, we continue to expect an upward trend in prices as the market returns to equilibrium driven by slowing non-OPEC supply growth and firming demand.

The rapid pace of development and diversity within the technology sector make it both one of the most rewarding and the most challenging to play from an investment perspective. As the rate of innovation accelerates across so many different disciplines and so many vertical and geographical markets, so the opportunities for value creation are increasing. Equally, gaining an in-depth understanding of the investment case becomes more challenging, as technology becomes more involved, the pace of development accelerates, business models change and competition globalises. At Edison, we feel we have built a unique global platform for bridging this gap and our inaugural Australia and New Zealand ‘Edison Talks Tech’ conferences are an important new component in this. We hope you find them enjoyable, informative and effective.

The rapid pace of development and diversity within the technology sector make it both one of the most rewarding and the most challenging to play from an investment perspective. As the rate of innovation accelerates across so many different disciplines and so many vertical and geographical markets, so the opportunities for value creation are increasing. Equally, gaining an in-depth understanding of the investment case becomes more challenging, as technology becomes more involved, the pace of development accelerates, business models change and competition globalises. At Edison, we feel we have built a unique global platform for bridging this gap and our inaugural Australia and New Zealand ‘Edison Talks Tech’ conferences are an important new component in this. We hope you find them enjoyable, informative and effective.

Ecosystems are becoming more sophisticated as users do more with their devices. Consequently, how one ecosystem differs from another is becoming less obvious. We have introduced four new laws of robotics to better evaluate the different players. iOS continues to gain in strength, while Google is still struggling with software problems. The lead challengers are Microsoft, Xiaomi and Yahoo! all of which have a lot to do.

As the Big Oil year-end 2014 reporting season draws to an end, we reflect on the main messages from the strategy updates. Based on current guidance, majors’ organic capex is set to fall around 13% in 2015, after four straight years of capex hikes. Spend could drop more as service costs are seen declining 20-30% from their 2014 peak. Exploration and pre-FID projects – notably expensive, complex projects such as deepwater, LNG and oil sands – are prime targets for investment cuts. Base capex in high-cost regions is also being trimmed, which should accelerate global decline rates. Majors appear keener on divestments than acquisitions for now, but we would expect to see opportunistic mid-sized asset deals. In our view, Big Oil’s focus on dividends may be preventing managements from acting more countercyclically in a downturn.

‘Exploration watch’ is a regular Edison publication focusing on upcoming exploration activity and the impact on notable E&Ps. In this inaugural edition, we look at the upcoming campaign in the North Falklands Basin where the first well, Zebedee, is due to spud in March 2015. This campaign, targeting c 350-600mmbbl, is often referred to as ‘exploration’; however, it includes a significant element of low-risk exploration together with an appraisal opportunity, especially for those looking to expand on the existing Sea Lion footprint. With Sea Lion development FID expected in 2016, appraisal and low-risk exploration elements of the upcoming Zebedee, Chatham and Jayne East wells could all add high-value barrels to the existing 393mmboe of contingent resources identified to date. The biggest exploration targets, however, lie 40km to the south of Sea Lion where the Isobel/Elaine complex could be as big again as Sea Lion. The Falklands has seen no exploration drilling for over two years, so this campaign will be a welcome return for investors interested in what is still essentially a frontier region.

As the oil market awaits a negative supply response to the sharp correction in crude prices since mid-2014, we suggest a period of inertia may be ahead, with oil production, particularly from US shale, holding up in the near term. Supporting this inertia we see falling service costs, improved operating efficiencies and significant hedging as combining to sustain near-term activity. Hence, while a price correction is likely in the medium term, we forecast crude prices to remain subdued at current levels for the remainder of 2015, for which we estimate an average crude price of $52.5/bbl for the year. As 2015 capex cuts bite, hedges unwind and funding becomes increasingly difficult to secure, we expect this will form the foundation of a recovery early in 2016, where we estimate an average of $72.5/bbl will be achieved for the full year.

The oil market was late in appreciating the significance of the shale revolution and slowing demand growth. Arguably, however, the 50% plunge in prices in the second half of 2014 was excessive and is setting the scene for a rebound. Sub $60/barrel prices are below fully accounted costs for a wide swathe of projects. Sharp investment cutbacks are likely, which is particularly relevant for high depletion rate shale oil producers. The price trend may remain soft during early 2015 reflecting a continuing supply surplus. By the second half, however, we would expect a firming tendency once the significance of financing constraints and likely slowing US production growth are assimilated. Medium term, we believe a price ceiling could emerge at $75-80/barrel given the new found elasticity of supply through shale development, capacity additions in Brazil, Canada and Iraq and structural issues slowing demand growth.

Last week’s OPEC meeting has fuelled the continuing slide in crude oil prices that began back in June 2014. With crude oil prices down c 40% since that time and no sign of support from either OPEC or non-OPEC producing nations, the world has had to wake up to the burgeoning level of oversupply hampering the crude oil markets. Driven by booming oil shale activity, US oil production reached 8.9mmb/d in October, within reach of Saudi Arabia at 9.75mmb/d. From this perspective it was clear something had to be done. With the industry now beginning to cut spending in response to weaker pricing, we expect that a material reduction in US oil output, and by consequence a stabilisation in crude prices, is on the horizon. In the interim we expect pricing to remain weak, with key investment opportunities in the upstream sector being low-cost operators with significant cash and low debt. We reduce our 2015 oil price expectations to $75/bbl for Brent and $70/bbl for WTI, while leaving our long-term view unchanged at $80/bbl.

With regard to renewables, those lyrics, “Here Comes the Sun”, finally seem to be coming to fruition, as evidenced by the recent performance of many companies in the alternative energy/renewables sector. The recent plethora of yield company spin-offs, as well as similarly missioned “total return” companies, has provided visibility to the sector, validating it further, and offering investors a unique way to play the alternative energy/renewables space in terms of both yield and growth potential. While volatility is likely to be high, overall, we are bullish on the alternative energy/renewables sector, and believe the “total return” concept offers investors the potential for diversification, higher yield and more secured cash flows associated with renewable assets. In this report, we initiate coverage of the alternative energy/renewables sector, and present an overview of climate change, snapshots of the main subsectors and spotlights on select “yieldco/total return” companies in the space.

Welcome to the Edison research guide for the Deutsche Börse Eigenkapitalforum 2014. Edison is delighted to be a partner for this event for the third time. This book profiles 75 companies that will be presenting at the Eigenkapitalforum. Connecting a large number of investors with a broad range of companies in a forum like this is moreimportant than ever. Being able to discuss the business model and outlook directly with management is hugely important for investors to identify value. In the same way, it offers quality companies the chance to stand out of the crowd and attract new investors. Thanks to all those who took the time and effort to communicate with Edison’s analysts – your contributions are reflected in the quality of this year’s research guide. The guide opens with a market strategy piece and includes an overview of each sector, as well as conference programme and maps. The company profiles include: • a discussion of the company’s strategy and market position; • a review of the business’s recent financial performance; and • a discussion on valuation based on consensus or Edison estimates. Hard copies of this guide will be available at the forum. Edison is Europe's leading investment intelligence firm, setting the standards for investor interaction with corporates. Our team of over 120 analysts and investment professionals works with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 450 retained corporate and 60 investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Our research can be accessed free of charge at http://www.edisongroup.com.

The heady days are over. Growth is slowing and competition is growing. There has always been opportunity for change in the mobile industry but both Apple and Google seem to have found the holes in the armour and are moving to address their weaknesses. This puts a time limit on any challenger as the risk is that these two become so big and so ubiquitous that users cannot be bothered to look elsewhere.

Welcome to the Edison research guide for the OktoberINVESTfest. Edison is delighted to be a partner for this event for the second time. This book profiles the 14 German and 13 American companies presenting at the Invest in Bavaria forum in New York on 20 October 2014.

Edison Investment Research is delighted to be working with ASX on its upcoming Spotlight Conferences in Singapore and Hong Kong on the 21 and 23 October. Below please find a link to the report Edison has produced for the event. It features profiles for each of the participating companies. We would like to thank ASX and the companies involved for their cooperation.

The heady days are over. Growth is slowing and competition is growing. There has always been opportunity for change in the mobile industry but both Apple and Google seem to have found the holes in the armour and are moving to address their weaknesses. This puts a time limit on any challenger as the risk is that these two become so big and so ubiquitous that users cannot be bothered to look elsewhere.

The oil market has finally succumbed to fundamental forces and a strong dollar over the past three months or so. Recently, Brent and WTI have been down almost 20% from the June highs. Significantly, geopolitical issues have been downplayed and instead the market has focused on surging production growth in North America and lacklustre demand. The market has indeed been swimming in oil. OPEC will probably attempt to cut production in the coming months but is likely to have difficulty in accommodating non-OPEC production growth plus rising production in Libya and potentially in Iraq and Iran. We believe OPEC has lost control of the market much as in the second half of the 1980s with the game changer this time around being the US shale revolution and the Alberta oil sands. Near to medium term the outlook remains bearish for oil prices.

The evolution of the Australian onshore unconventional sector is nearing the sharp end. JVs are largely bedded down, key work programmes are mapped and funded, and the next two years is about execution. In this report we update our August 2013 report by tracking progress of a subset of onshore players. We review macro developments, track well and seismic activity and compare deal flow with our previous report. We also analyse equity performance, and assess how the market has moved relative to company progress. Short-term investor focus appears to be on take-over targets, but we think that focus will revert to activity. With the Cooper Basin programmes in full swing, the event horizon may not be far off. Medium-term focus is on those driving the activity, while investing in the resource plays is more about longer-term positioning.

Nigeria is Africa’s major oil producing country, with 2013 volumes of 2.3mmb/d. By far the largest producer in Africa and with the second largest reserves, Nigeria has the potential to grow much further if exploration and development can be encouraged. Civil unrest and thefts have hit investment in the country over the last decade and despite incidents declining, the country still has problems on these fronts, key reasons given for the divestment programmes announced by many of the majors. In this report, we hope to introduce the Nigeria petroleum sector to investors; we discuss the geology and politics and provide brief summaries of the Nigerian sector, from Afren down to micro-caps. Nigeria represents an ever growing investment opportunity in our view. With this in mind, and in conjunction with Instinctif Partners, we look forward to welcoming Century Group, Sea Trucks Group, Seven Energy, Seplat and Control Risks Group to a Nigeria-focused investor day on Tuesday 8 July at our London office.

Welcome to the Edison healthcare quarterly, which contains profiles of 75 companies under coverage. The book opens with an overview of biomarker programmes within drug development by Philippa Gardner, and the challenges and opportunities these present for the pharma and biotech industry. Incorporating a biomarker programme into drug development with the aim of identifying companion diagnostics (CDx) could offer a number of advantages. These include the ability to identify patients most likely to respond to or better tolerate a given agent, potentially improving the chances of clinical success, regulatory approval and reimbursement from healthcare payers. However, it is only recently that the rate of development and regulatory approvals for targeted agent/diagnostic combinations has accelerated. Herceptin was the flagship for the CDx field and unsurprisingly, the majority of drugs with a requirement for genetic testing remain in cancer. However, biomarker development is broadening to other indications, and companies now seem to be more proactively considering biomarker development at earlier stages of development.

The trend in international oil prices has been less than robust in early 2014 but firmer than fundamentals might have suggested. Once again, the explanation is geopolitical developments, with Ukraine very much to the fore of late (see pg 6). The Ukraine crisis, however, is unlikely to intensify to the extent necessary to disrupt Russian exports. Neither Russia nor the west could afford such a cataclysmic event, although it is possible that a low-level crisis over Ukraine lingers for some time. We continue to believe that the medium-term outlook is bearish for oil, reflecting burgeoning non-OPEC supplies, the upward trend in Iraq production and likely modest demand growth. A key area of medium-term uncertainty relates to the response of OPEC to rising non-OPEC and Iraqi output.

Welcome to the Edison healthcare quarterly, which contains profiles of 77 companies under coverage. The book opens with an overview of allergy immunotherapy by Lala Gregorek. Investor interest in allergy immunotherapy (AIT) has been revived by the announcement of Circassia's intended £200m IPO on the London Stock Exchange coupled with positive FDA Advisory Committee (AdCom) recommendations for the approval of three respiratory allergy immunotherapy tablets. These AdCom discussions also have important repercussions for the wider therapeutic modality. The expert panel confirmed significant US market potential for novel AITs and provided insight into FDA requirements for trial design and approval of respiratory AIT products, facilitating the path to approval for other companies looking to enter the US market, including Circassia.

Edison Investment Research is delighted to be working with ASX on its upcoming Spotlight Conference in London on 6 March. Below please find a link to the report Edison has produced for the event. It features profiles for each of the participating companies. We would like to thank ASX and the companies involved for their cooperation. For more information please contact Will Corkill: (JavaScript must be enabled to view this email address)

2014 is set to be a landmark year in terms of African exploration, especially for investors in smaller independent E&Ps. In this report we look at a group of E&Ps that are targeting over 27bnboe from wells being drilled over the next 12 months that could, in the success case, open up more than 70bnboe of play opening resource. Our analyses take into consideration a range of criteria including resource size, geological and commercial risks, funding constraints and fiscal terms as we seek to identify those companies with the most compelling valuation upside. While almost all companies offer value at current share prices, a few consistently shine brightest across our various analytical lenses.

While the uranium sector is still recovering from the Fukushima-induced demand shock, the supply-demand balance is gradually improving supported by production cuts and the HEU expiration. We suggest this creates a base for the spot uranium price to recover from current lows. The potential turnaround in uranium prices should be supportive of uranium equities. As such, we suggest a strategy to play the uranium sector through high-quality exploration companies and near-term producers that offer a low opex/capex entry to the market.

Edison Investment Research is delighted to be working with ASX on its upcoming Spotlight Conference in New York on 27 February. Below please find a link to the report Edison has produced for the event. It features profiles for each of the participating companies. We would like to thank ASX and the companies involved for their cooperation. For more information please contact Will Corkill: (JavaScript must be enabled to view this email address)

Edison's analysts have been in contact with the 150 Alternext listed companies profiled in this review, aiming to provide investors with a snapshot of each company's activities, strategy, recent newsflow and upcoming catalysts. Our analysts have relied on consensus earnings estimates, but have reflected feedback from companies on historic and forecast numbers. Diaxonhit, Esker, Global Bioenergies, Deinove, Hybrigenics, Prodware and Neovacs are clients of Edison Investment Research, and their forecasts are those of the analyst.

Welcome to our special Indaba edition of Edison Insight, with brief profiles of our mining coverage list together with a sector overview by sector head Charles Gibson. Our coverage ranges from market leaders through to junior explorers. Our approach is global and we write on companies on several different exchanges, including the TSX, ASX and JSE.

We continue to believe that the near- to medium-term outlook for crude oil prices is bearish. Non-OPEC controlled supply is growing strongly driven by North America, and barring unplanned outages should run ahead of modest global demand growth. The key wildcard is OPEC's response to the growing supply pressure. It is worth noting in this context that Iraq has the freedom and probably the capacity to boost output, and Libya and Iran both wish to increase production as circumstances allow. Significantly, Saudi Arabia seems to be suggesting that it will not necessarily offset production gains elsewhere within OPEC. It also has no interest in providing a price umbrella for relatively high-cost non-OPEC producers.

Last month's Africa Oil Week conference in Cape Town ably demonstrated that interest in the E&P sector across the continent remains strong. Against a backdrop of extensive geopolitical uncertainty, attractive geoscience opportunities remain plentiful. While much of the focus was on established provinces, most particularly Nigeria, we see exploration will provide the real buzz for the sector, with 2014 set to be a bumper year on this front.

Immuno-oncology – which groups immune checkpoint blockers with immunotherapies and cancer vaccines – is undoubtedly becoming the highest-profile area of drug development from the investor's point of view. This has been driven by the remarkable data seen in early clinical studies of the anti-PD-1/PDL-1 agents that has marked out this drug class as the potential future cornerstone of therapy for many solid tumours. Checkpoint inhibitors have eclipsed cancer vaccines, but we consider there could be merit if the two approaches are combined. 2014 should see a number of key study readouts of anti-PD-1 agents, as well as the start of new studies that look set to define the emerging competitive landscape. In this report, we update our recent overview.

Welcome to the 2013 edition of the Deutsche Böerse Eigenkapitalforum research guide. This guide profiles a selection of companies from each sector, which will be presenting at this year’s investor conference. Hard copies of the guide will be available at the forum. Thanks to all those who took the time and effort to communicate with Edison’s analysts – your contributions are reflected in the quality of this year’s research guide. The guide opens with a market strategy piece and includes an overview of each sector, as well as conference maps.

A new production trend has been emerging in Latin America. Smaller independent E&P companies have significantly contributed to increased production levels in Colombia, with similar results possible in Argentina, Peru, Paraguay and Trinidad. In this report we introduce three valuation screens based on cash flow, market value and risk, from which we segment our universe of 18 independent oil companies. Our top picks for the region are GeoPark, Americas Petrogas, Madalena, Canacol,Petroamerica and Suroco. Also seen as high potential but slightly higher risk are Crown Point, President, Touchstone and Range.

Oil prices were bid higher in late August by exaggerated fears concerning geopolitical developments in the Middle East and supply disruptions in Libya. The reality, however, is that the market continues to be well supplied while demand growth is subdued. Supply is effectively being comfortably underpinned by rising Saudi and non-OPEC production. In all probability major supply disruptions will be avoided in the coming months and Libyan exports will gradually come back on-stream. This could leave scope for prices to weaken somewhat in the near term. A rapprochement between the US and Iran is a wildcard, but if it happens will be bearish for oil prices.

Edison is proud to support the 10 German Mittelstand companies from the IT, software, transportation, machinery, automotive and base industry sectors taking part in the annual OktoberINVESTfest in New York, hosted by the Bavarian Ministry of Economic Affairs. Our research guide provides investors with a rationale for investing and a context for discussions with management. German unemployment is at a 20-year low and the budget deficit is a fraction of that of the US, Japan or the UK. The Mittelstand (defined as companies with less than €50m in revenue) accounts for 38% of German corporate revenue. Characterised by a high level of engineering sophistication and quality, the German Mittelstand has proved resilient to cheaper competition by maintaining a technical edge and a focus on exports.

On the coattails of our Onshore down under report, we recently attended two major Australian E&P sector conferences. The first event, DUG Australia, delivered a dose of cautionary top-down reality from those from North America who have done it all before. The second event, Good Oil, provided a strong offset by reminding of the sheer scale of the opportunity set on offer to investors in Australia. The two events served strong support for the overarching conclusion we reached in Onshore down under: careful E&P stock selection in Australia is critical.

Valuing oil and gas companies requires both a clear understanding of the potential value of each asset within a portfolio, and an ability to rigorously risk these to reflect asset specific, company and macroeconomic uncertainties. This document introduces the principles by which Edison conducts its research into such companies, our approach to identifying the key criteria that drive our risk weightings, and the process by which we define the macroeconomic assumptions that ultimately drive our company valuations.

A few years ago, cancer immunotherapy papers that made it into ASCO would be scheduled for presentation on the last half day of conference when most attendees were already heading out of town. Not so this year, when immunotherapies were featured in the prime Sunday and Monday sessions. Moreover, this year additional sessions were dedicated to this topic at ASCO, such has been its change of fortune. This reflects the progression the field has made in the last few years as well as the importance this type of therapy is set to play in cancer management. In this report we provide an overview of the immunotherapy field.

Abenomics may actually be working! The Bank of Japan’s closely watched Tankan survey, which measures sentiment among large manufacturers, was +4 in June. That is the highest reading since March 2011 (+6). Industrial production rose 2% in May vs April, the fourth consecutive monthly rise.

Suite aux feedback du marché, nous avons étendu la portée de l'analyse dans chaque profil. Les analystes d'Edison ont été en contact avec les 150 sociétés cotées sur NYSE Alternext dont le profil est établi dans cette analyse. Elle vise à fournir aux investisseurs un aperçu des activités, de la stratégie et des derniers résultats financiers de chaque entreprise, ainsi qu'un commentaire sur leur valorisation. Les analystes d'Edison se sont fondés sur les estimations de bénéfices du consensus tout en tenant compte des commentaires reçus par les entreprises quant aux chiffres rétrospectifs et prévisionnels. Deinove, Diaxonhit Global Bioenergies, Hybrigenics, Esker et Neovacs sont des clients d'Edison Investment Research et leurs prévisions sont réalisées par nos analystes.

In this document we provide an overview of the UK-listed investment trusts managed by Aberdeen Asset Management and Aberdeen Private Equity Fund, which is managed by AberdeenSVG, with an introductory section that gives an insight into the investment processes used and discussion of the investment outlook for the market areas covered by the trusts.

Asia is a vast region, with countries in differing stages of political and economic development. The economies of China, Japan and India dominate the region and asset allocation to, and stock selection within, these markets is a core part of managing Asian portfolios. Each of the big three is at a different stage of development, offering investors distinct opportunity sets.

The German auto industry is under threat from cheaper Asian imports. Despite the recent correction, the yen has weakened by 14% vs the euro year to date (to 31 May). This is principally due to the Bank of Japan’s plans to double the monetary base and give Japanese auto manufacturers a significant price advantage over European peers. Furthermore, Japan’s reflationary policies are likely to provoke reciprocal action from key trading partners such as China and South Korea. If a series of competitive devaluations develops, then the euro will automatically appreciate vs both the yen and the won. Under this scenario, Asian cars will offer increasing value to eurozone consumers and German manufacturers may begin losing market share in their home continent. These developments coincide with deepening concern about China’s economic outlook. China is an increasingly important export market for German auto manufacturers and lower demand growth from this region would have a noticeable impact on revenues and profits.

The near- to medium-term outlook for oil prices is looking increasingly bearish. Largely driven by North America, non-OPEC supplies are growing robustly, OPEC production is buoyant, demand growth is subdued and inventories are very comfortable. There is clearly the possibility of a price rout over the next year or two. However, we suspect that, in the near term at least, geopolitical uncertainties, fears concerning the fragility of production infrastructure and bullish financial market sentiment will help support prices. An extended period of soft prices could be on the cards through mid-decade. The analogy could be the second half of the 1980s.

In response to market feedback, we have extended the scope of analysis provided in each profile. Edison's analysts have been in contact with the 150 NYSE Alternext listed companies profiled in this review, aiming to provide investors with a snapshot of each company’s activities, strategy, recent financial performance as well as comment on valuation. Edison’s analysts have relied on consensus earnings estimates but have reflected feedback received by companies on historic and forecast numbers. Deinove, Diaxonhit Global Bioenergies, Hybrigenics, Esker and Neovacs are clients of Edison Investment Research, and their forecasts are those of the analyst.

The Australian petroleum production and exploration association (APPEA) 2013 conference provided much food for thought. Unlike past years when the sense of collective buoyancy was palpable, this year there was a definite theme of reflection. The sector is now deeply aware that much of its cost structure is no longer globally competitive. With the current fleet of mega-liquefied natural gas (LNG) projects now each well advanced towards completion, there was much talk about needing to prepare for ‘the next wave’ of investment. In our view, the next wave is likely to look very different to the last. We think the smaller and more nimble players are best placed to benefit from market dynamics over the next five or more years.

We find it interesting that several industrial machinery stocks appear at the top of our rising revisions screen this month. Earnings in this sector are sensitive to the economic cycle, which appears at odds with weak macroeconomic data released in recent weeks. In particular, German GDP fell by -0.6% in Q412 and the Ifo business expectations survey fell to 101.6 in April (vs 103.6 in March). In addition, GDP growth in China slowed to +7.7% year-on-year in Q1 vs market expectations of +8%. We believe there are other, more specific, factors at play including the continued success of German global exports and the potential for gross margins across the sector to expand as metal prices decline. On a wider scale, central banks continue to provide ongoing liquidity and maintain interest rates at low levels; this encourages capital flow into cheaper, riskier assets such as industrial machinery stocks. We identify three companies in this sector that screen well and should attract investors; Koenig & Bauer, KSB and Schaltbau. Koenig & Bauer is a company we have previously highlighted and is one of only three stocks to make the top 20 in both our value and momentum screens.

After a busy three years of drilling up to the end of 2012, activity in the Falklands in 2013 is significantly quieter, with the focus switching to 3D seismic acquisition. Much was learnt in the 2012 South Falklands drill programme, although an oil discovery remains elusive. Borders exited the 2012 campaign with what could be a commercial condensate development in Darwin, while in the north Rockhopper secured a partner for its Sea Lion discovery. This success still gives investors much to buy into; however, the reality is that with no drilling likely in either basin until late-2014, a lack of near-term drill catalysts may keep investors away for some months.

The book opens with an overview of the new German drug pricing system (AMNOG) by Dr Michael Aitkenhead. He writes that AMNOG, which sets reimbursed prices based on added benefit over existing therapies, presents a major barrier to market access for new drugs in Europe’s largest market. Recent negative pricing decisions for newly licensed drugs (ie GW Pharma’s Sativex) and the initiation of reviews for already marketed products (DPP-4 inhibitors) have brought AMNOG back into focus. Results of AMNOG benefit assessments to date, which are undertaken by IQWiG/G-BA, suggest four factors are critical for a positive outcome: (1) clinical data versus G-BA’s chosen comparator therapy, (2) supportive evidence based on hard endpoints, (3) trial results including patient sub-groups relevant to G-BA, and (4) negotiations with G-BA once IQWiG’s initial results are published.

Corporate releases suggest that German industrials plan to grow international sales through direct foreign investment in regions such as China and the US. For example, Grammer and SHW both outlined plans for acquisitions and/or greenfield developments in the US in order to align costs and revenues in the NAFTA region. Their confidence is borne out of export success, often on the back of supply contracts with German OEMs. We think it signals a belief that economic growth in these regions will outperform Europe over the long term (note, the US now has 14 consecutive quarters of GDP expansion and a recovering housing market). FDI outside Europe also helps German companies to diversify eurozone currency risk. Across the industrials sector, corporate balance sheets are healthy and cash generation is strong. Both act as great facilitators for FDI. Using our value and momentum tools we highlight four companies with international operations that screen well and have low financial gearing (and thus capital to invest): Steico, Deutz, WashTec and Krones.

Over the past three years the weaker euro has boosted exports for the German industrials sector. If exports continue to prosper and industrial production (IP) growth cyclically recovers then we could see a ‘demand nirvana’ in the sector akin to conditions in 2010. The Ifo business confidence indicator, which rose sharply in February, lends credibility to this synopsis. Using our proprietary value and momentum screens, we highlight four companies we recently met that screen well and could potentially re-rate: Koenig & Bauer, Deufol, Homag Group and R Stahl.

Edison Investment Research is delighted to be working with ASX on its upcoming Small to Mid Caps Conference in London on 7 March. Below please find a link to the report Edison has produced for the event. It features profiles for each of the participating companies. We would like to thank ASX and the companies involved for their cooperation. For more information please contact Will Corkill: (JavaScript must be enabled to view this email address)

Welcome to the February edition of Edison’s Asia-Pacific resources quarterly, designed to raise the profile of a selection of the region’s listed companies with investors both in the region and internationally. The book opens with sector focus pieces from our oil & gas and mining teams.

Prior to the 21 February setback, Brent was close to $120/barrel, the upper end of the trading range and a level that has historically had negative implications for economic activity. We believe that the upward trend in Brent in the early weeks of 2013 was divorced from the fundamentals and reflected unduly bullish expectations for the world economy and the potential for supply disruptions. In the coming months we think that oil prices could trend down in the face of a comfortably balanced market.