1. Research
27. Juli 2021
The recent flood caused by heavy rain was among the most severe natural disasters hitting Germany since reunification. More than 170 people lost their lives and many private homes and public buildings, roads and municipal infrastructure were destroyed. Since the flooding occurred in regions with low industrial density, the expected negative impact on overall economic activity, in particular on industrial production, should be relatively limited. Still, the regional impact on agricultural production (such as wine-growing) might be significant. Some of the most recent polls already fully capture post-flood views. As expected, there is no big shift in voter preferences. The events will likely confirm voters' previous choices. [mehr]
27 July 2021 Deutsche Bank Research Europe Germany Economics Germany Blog Date Recent floods to have limited impact on growth outlook and election outcome July floods: Among the most severe natural disasters in the recent past The recent flooding caused by heavy rain was among the most severe natural disasters hitting Germany since reunification. More than 170 people lost their lives and many private homes and public buildings, roads and municipal infrastructure were destroyed. Several villages were cut off from the outside world and could only be reached after a few days. This was not the first flood of historic proportions in the recent past, although the death toll was by far higher than during the 2002 and 2013 floods (25 and 45, respectively). Overall, the current crisis appears be much more disastrous than those two previous events. The epicenter of the disaster lies in predominantly rural areas in the highlands, mainly in the western part of Germany. Other rural areas in the south were also affected by heavy rain and floods. Limited impact on GDP growth for Germany as a whole Since the flooding occurred in regions with low industrial density, the expected negative impact on overall economic activity in Germany, in particular on industrial production, should be relatively limited. Still, the regional impact on agricultural production (such as wine-growing) might be significant. Right now, it looks like the economic damage to the agricultural sector might amount to billions of EUR. In contrast, the subsequent rescue and emergency aid - as well as reconstruction of destroyed infrastructure - could lead to small positive growth impulses in the short to medium term. In response to the floods, the federal government decided last week to provide federal emergency aid to affected households worth EUR 200 m. The federal states are supposed to add another EUR 200 m to lift these emergency payments to a total of EUR 400 bn (or 0.01% of GDP). These cash payments should be disbursed before the end of July to both insured and uninsured persons and might amount to up to EUR 3,500 per private household. In addition, private donations and other support programs are expected to add to the overall financial support volume to the affected regions. These funds guarantee the procurement of goods essential for survival and reconstruction in the flooded areas. As the construction sector is working close to full capacity, the real GDP growth impulse from subsequent reconstruction works should be rather marginal in the short term. On a negative sidenote, the rescue and reconstruction operations increase the risk of a COVID-19 superspreader event as hygiene and distancing rules understandably could play a subordinate role in the affected areas. However, even if this adverse risk scenario materializes, the overall impact on the German Marc Schattenberg Senior Economist +49-69-910-31875 Stefan Schneider Chief Economist +49-69-910-31790 Barbara Boettcher Senior Economist +49-69-910-31787 Marion Muehlberger Senior Economist +49-69-910-31815 Jochen Moebert Senior Economist +49-69-910-31727 Sebastian Becker Senior Economist +49-69-910-21548 Deutsche Bank AG DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 051/04/2021. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS. 27 July 2021 Germany Blog Page 2 Deutsche Bank AG macro economy should be low. As the upside and downside risks to economic activity cancel each other out, we stick to our current Q3 and Q4 2021 GDP forecasts of +4% and +1.5% quarter-on-quarter, which continue to back our (annual average) real GDP growth forecast of 4.0% for 2021. Reconstruction: High capacity utilization might limit any positive growth impulse in the short run As the level of capacity utilization is close to an all-time high in the overall German construction sector (July: 78.5% vs annual all-time high 78.8%), it will be challenging to quickly rebuild the devastated areas (including public infrastructure, e.g. supply of fresh water, sewage systems, railroad tracks). In the worst case, the increased reconstruction activity in the affected regions could lead to a crowding out (of real resources), thus dampening real construction activity elsewhere. This is also a big difference to previous flood events of 2002 and 2013. Back then the utilization levels in the construction sector were much lower, at 59.6% (an all-time low) and 72.9%, respectively. Despite a comparatively high capacity utilization ratio in civil engineering (76.1%), the construction industry association believes that there is sufficient capacity to tackle the repair of flood damage in a timely manner. The prerequisite, however, is a rapid award of contracts that takes into account the small to medium-sized structures in the regions. Despite the initial enthusiasm, the repair work is likely to be protracted as structural headwinds - such as material shortages and regional shortages of skilled labor - persist. Bureaucracy and (supply-side) bottlenecks in public administration might also slow the overall pace of reconstruction. High loss of insured and non-insured wealth Due to the high death toll and massive economic damage, many experts reckon that the current flood-related loss of wealth is much higher than during past floods. One indication often used is the amount of insured losses. The German Insurance Association (GDV) estimates that insured losses could amount to EUR 4-5 bn (roughly 0.1% of GDP forecast for 2021). This estimate exceeds the overall losses incurred in 2002. In 2013, according to GDV data, total claims regarding property and natural hazards insurance amounted to EUR 2.24 bn (ca. 0.08% of 2013 GDP). In the current flood event, the effective duration of the flooding will be a key determinant of the ultimate outcome of property damage. The longer buildings remain under water, the higher the damage will be (in the worst case, there might be no way around tearing down heavily affected buildings). As the recent disaster happened in areas that had been only mildly affected by similar events in the past, many homeowners and companies might lack appropriation insurance coverage for natural distasters. Therefore, the total uninsured loss could be a multiple of the estimated insured loss. By way of comparison, the total damage caused by the floods in 2002 was estimated at just under EUR 12 billion, equivalent to about 0.53% of nominal GDP in 2002. In our view, the total damage suffered this time is likely to be even higher and might well exceed the magnitude of the 2002 event. The introduction of compulsory insurance for homeowners is currently being debated - especially since damage caused by heat waves and floods could increase in scale and frequency. In addition, recent events could lead to more public investments in disaster management. Many lives could have been saved if the communication from weather alerts to citizens had worked smoothly. Given Figure 1: Insured losses caused by recent floods and heavy rain 4000 -5000 4650 2240 480 400 380 360 2021 - Bernd* 2002 - August flood 2013 - June flood 2016 - Elvira II June 2021 - Severe weather events* 2010 - Viola 2014 - Quintia, Renate, Susanne Extreme weatherevents: l ow-pressure areas that caused heavyrains and flooding Insuredlosses in property and natural hazardsinsurance (ex car insurance) in millions of euros (in 2020 prices). * Preliminaryestimate Source : German Insurance Association (GDV), Deutsche Bank 27 July 2021 Germany Blog Deutsche Bank AG Page 3 structural bottlenecks in public administration and the construction sector, these investments might also increase the structural price pressure. Likely budgetary impact rather small At this time, the total economic damage is still largely unknown. Hence, any flood related fiscal costs (to be incurred at the federal, state and/or local government levels) can only be approximated by drawing on experience from past flood disasters. Generally, Germany's fiscal response comprises a) immediate financial aid to affected households/companies/farmers as well as b) the necessary public funds to finance the reconstruction works of destroyed public infrastructure (roads, bridges, cell towers, buildings, supply lines, railway tracks and stations). As regards the first element, both the federal government and the federal states have promised to provide emergency aid of EUR 400 m in a timely and unbureaucratic way. As the state aims to disburse this money as quickly as possible, it will have to compromise on the thoroughness of its means-testing procedures (i.e. regarding the wealth/income situation of affected people). That being said, the federal government already hinted that it will abstain from any means testing to avoid unnecessary delays in disbursements. The emergency aid is meant to give basic support to affected private households and provide interim aid to companies and self-employed persons to cover for revenue losses. As regards the second element, the government reckons that the overall costs of the reconstruction work might be as high as EUR 6 bn (almost 0.2% of GDP). Moreover, the federal government said it will pay the full amount of the reconstruction costs that are related to damaged federal infrastructure (i.e. federal roads, highways and railroads). In this context, Deutsche Bahn said that the damage might reach historic dimensions, stating that the costs of repairing the railroad system as well as destroyed railroad stations could reach EUR 1.3 bn. Finance Minister Olaf Scholz (SPD) and Minister of the Interior Horst Seehofer (CSU) already said that the volume of federal aid could still rise further if emergency and reconstruction needs turn out to be higher than currently approximated. Although the overall fiscal impact is far from certain, experience from past floods - such as those in 2002 and 2013 - points to overall fiscal costs of around 0.2-0.3% of GDP. In the aftermath of the 2002 flood, the federal government established a special extra-budgetary fund of EUR 6.5 bn (roughly 0.2% of 2002 GDP). However, "only" EUR 5.3 bn (0.24% of 2002 GDP) was actually disbursed, while the remainder of EUR 1.2 bn was transferred back to the fiscal accounts of the federal government and the federal states. Following the 2013 flood, the federal government implemented another extra-budgetary vehicle, which totaled a somewhat higher EUR 8 bn (0.3% of 2013 GDP). Of these special funds, "only" EUR 5 bn (0.18% of 2013) has been actually spent so far. Another EUR 1.2 bn is still planned to be spent, which could bring the total cost to EUR 6.2 bn (2.2% of 2013 GDP). That said, another EUR 1.8 bn was already transferred back to the federal budget (see also FAZ article from 17 th of July 2021). Given the above (likely) fiscal dimensions, the budgetary impact should be comparatively small at the total government level, in particular when compared to the much larger fiscal impact from the COVID-19 pandemic. Just for the budget year 2021, the total of authorized net federal credit borrowing amounts to as much as EUR 240 bn (or around 6.8% of GDP forecast for 2021). 27 July 2021 Germany Blog Page 4 Deutsche Bank AG Flood unlikely to be as decisive for election outcome as back in 2002 When thinking about possible effects of a flood on an upcoming federal election, the events of 2002 immediately come to mind. Back then, SPD Chancellor Gerhard Schröder was trailing in the polls with his reelection hanging in the balance. By effectively portraying himself as crisis manager during the flood, he eventually turned the tide. Still, 2002 does not lend itself to comparison for two reasons. First, the event was much closer to election day; second, the race was much tighter. In the end, the mere 3.7pps that the SPD gained in the aftermath of the flood vis-à-vis the CDU/CSU were sufficient to win the election. Currently, the CDU/CSU has a 10pp lead over the Greens, meaning a much larger shock would be required to fundamentally change the election outlook and by that our baseline of a black green government. Limited impact on polls as expected. Some of the most recent polls already fully capture post-flood views. As expected, there is no big shift in voter preferences. As the flood has again given rise to the awareness of extreme weather linked to climate change, it might have benefitted the Greens. But this does not seem to be the case (see Figure 3 ). In a recent survey (Spiegel, June 21), only one-third of voters state that climate change has become more decisive for their voting intentions. Thus, it is unlikely that the events will massively mobilize new green voters. Instead, they will likely confirm voters' previous choices. In addition, given the various climate related legal packages at both the domestic and EU levels, the Greens' focus on climate no longer substantially differentiates them from other major parties. Still, polarization between those who think this is "only" weather and those who think climate change increases the likelihood of such events in Germany might increase further. Laschet's popularity takes a small hit. If at all, it is the candidates' popularity that has (to a small extent) been impacted by the flood and the candidates' reaction to it. Laschet's small lead over Annalena Baerbock and Olaf Scholz seems to be gone (see Figure 4 ). While Baerbock remains on the sidelines calling for action but lacking any executive function, SPD candidate and Finance Minister Scholz is portraying himself as effective crisis manager providing emergency help. This has raised his standing, though not that of his party. Laschet's ability to manage a crisis is also being tested as he is PM of NRW, where large parts of the flooding occurred. Many in the public perceive his performance as reduced to an unfortunate few moments of chortling in the background during President Steinmeier's speech on July 18. This is also mirrored in our twitter sentiment analysis, which shows a net negative spike on that day (see Figure 5 ). Despite Laschet having apologized several times for this unbecoming appearance, it has again raised the question of whether he is the right leader to step into Merkel's footsteps. But Laschet's dip in popularity is likely to have only a limited impact on overall polls, possibly preventing the CDU from crossing the 30% approval rate, but not causing a significant decline. Figure 2: Polling dynamics after the 2002 floods 38.5 30 32 34 36 38 40 42 1-Aug 8-Aug 15-Aug 22-Aug 29-Aug 5-Sep 12-Sep 19-Sep CDU/CSU SPD % of votes in major surveys*, 7-dayaverage Floods Federal elections, Sept 22, 2002 Note: *major political surveys taken into account: Allensbach, Kantar, Forsa, FG Wahlen, Infratest, INSA. Source: Wahlrecht.de, Deutsche Bank Figure 3: Flood has not (yet) left its imprint on polls 0 5 10 15 20 25 30 35 40 CDU/CSU SPD Greens FDP Left AfD Pandemic % of votes in major surveys, weekly average Nomination Baerbock / Laschet Flood Source : Wahlrecht.de, Deutsche Bank Figure 4: Popularity of chancellor candidates - Laschet loses the lead 25 21 20 21 21 21 05 10152025 Laschet (CDU/CSU) Baerbock (Greens) Scholz (SPD) July 13, before the flooding July 21, after flooding, latest data %of votes Source : Spiegel, July 21 27 July 2021 Germany Blog Deutsche Bank AG Page 5 Figure 5: Social media sentiment: Flood leads to net negative spike for Laschet … 0 10,000 20,000 30,000 40,000 50,000 60,000 Mar-21 May-21 Jul-21 positive neutral negative mentioned on social media nomination as chancellor candidate flood Source : dbDIG Figure 6: … while Baerbock is spared this time 0 10,000 20,000 30,000 40,000 50,000 60,000 Mar-21 May-21 Jul-21 positive neutral negative mentioned on social media nomination as chancellor candidate discussions around her book Source : dbDIG Fourth wave and fiscal policy: In the spotlight ahead of the election. From today's point of view, these two topics will dominate the final weeks of the election campaign. Public discussion is currently focused more on why effective prevention failed (communication, sirens, etc.) than on how to reach ambitious CO 2 reduction goals. Both issues, though, raise pressing fiscal questions: (1) how to catch up on underinvestment in infrastructure during Merkel's era, and (2) how to fund the transformation to a net-zero economy. Facilitating higher fiscal spending in the absence of realistic options to change the debt brake is the key point here. Thus, it is important to monitor the candidates' statements over the next couple of weeks, which should provide better hints than election manifestos. Moreover, we expect the looming fourth wave (rising rate of infections combined with slowing pace of vaccination) to be the second key topic of the election campaign. The debate on mandatory vaccination vs civil freedom is likely to be in full swing by September. Not only inter-party but also intra-party views on that issue are diverging, as shown by statements by the Head of the Chancellery Braun (pro indirect obligation for vaccination) and Laschet (contra). As previously stated, we stick to our view that the electorate's perception of how well the pandemic is managed will continue to play a role in the election outcome. The next signpost to watch is the regular meeting between Chancellor Merkel and the state PMs scheduled for end-August but likely to be brought forward. 27 July 2021 Germany Blog Page 6 Deutsche Bank AG Appendix 1 Important Disclosures *Other information available upon request *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at https://research.db.com/Research/Disclosures/CompanySearch . Aside from within this report, important risk and conflict disclosures can also be found at https://research.db.com/Research/Topics/Equities?topicId=RB0002 . Investors are strongly encouraged to review this information before investing. Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s). In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Marc Schattenberg, Stefan Schneider, Barbara Boettcher, Marion Muehlberger, Jochen Moebert, Sebastian Becker. 27 July 2021 Germany Blog Deutsche Bank AG Page 7 Additional Information The information and opinions in this report were prepared by Deutsche Bank AG or one of its affiliates (collectively 'Deutsche Bank'). Though the information herein is believed to be reliable and has been obtained from public sources believed to be reliable, Deutsche Bank makes no representation as to its accuracy or completeness. Hyperlinks to third-party websites in this report are provided for reader convenience only. Deutsche Bank neither endorses the content nor is responsible for the accuracy or security controls of those websites. If you use the services of Deutsche Bank in connection with a purchase or sale of a security that is discussed in this report, or is included or discussed in another communication (oral or written) from a Deutsche Bank analyst, Deutsche Bank may act as principal for its own account or as agent for another person. Deutsche Bank may consider this report in deciding to trade as principal. It may also engage in transactions, for its own account or with customers, in a manner inconsistent with the views taken in this research report. Others within Deutsche Bank, including strategists, sales staff and other analysts, may take views that are inconsistent with those taken in this research report. Deutsche Bank issues a variety of research products, including fundamental analysis, equity-linked analysis, quantitative analysis and trade ideas. Recommendations contained in one type of communication may differ from recommendations contained in others, whether as a result of differing time horizons, methodologies, perspectives or otherwise. Deutsche Bank and/or its affiliates may also be holding debt or equity securities of the issuers it writes on. Analysts are paid in part based on the profitability of Deutsche Bank AG and its affiliates, which includes investment banking, trading and principal trading revenues. Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank provides liquidity for buyers and sellers of securities issued by the companies it covers. Deutsche Bank research analysts sometimes have shorter-term trade ideas that may be inconsistent with Deutsche Bank's existing longer-term ratings. Some trade ideas for equities are listed as Catalyst Calls on the Research Website ( https://research.db.com/Research/ ) , and can be found on the general coverage list and also on the covered company's page. A Catalyst Call represents a high-conviction belief by an analyst that a stock will outperform or underperform the market and/or a specified sector over a time frame of no less than two weeks and no more than three months. In addition to Catalyst Calls, analysts may occasionally discuss with our clients, and with Deutsche Bank salespersons and traders, trading strategies or ideas that reference catalysts or events that may have a near term or medium-term impact on the market price of the securities discussed in this report, which impact may be directionally counter to the analysts' current 12-month view of total return or investment return as described herein. Deutsche Bank has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof if an opinion, forecast or estimate changes or becomes inaccurate. Coverage and the frequency of changes in market conditions and in both general and company-specific economic prospects make it difficult to update research at defined intervals. Updates are at the sole discretion of the coverage analyst or of the Research Department Management, and the majority of reports are published at irregular intervals. This report is provided for informational purposes only and does not take into account the particular investment objectives, financial situations, or needs of individual clients. It is not an offer or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. Target prices are inherently imprecise and a product of the analyst's judgment. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own informed investment decisions. Prices and availability of financial instruments are subject to change without notice, and investment transactions can lead to losses as a result of price fluctuations and other factors. If a financial instrument is denominated in a currency other than an investor's currency, a change in exchange rates may adversely affect the investment. Past performance is not necessarily indicative of future results. Performance calculations exclude transaction costs, unless otherwise indicated. Unless otherwise indicated, prices are current as of the end of the previous trading session and are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is also sourced from Deutsche Bank, subject companies, and other parties. The Deutsche Bank Research Department is independent of other business divisions of the Bank. Details regarding our organizational arrangements and information barriers we have to prevent and avoid conflicts of interest with respect to our research are available on our website ( https://research.db.com/Research/ ) under Disclaimer. Macroeconomic fluctuations often account for most of the risks associated with exposures to instruments that promise to pay fixed or variable interest rates. For an investor who is long fixed-rate instruments (thus receiving these cash flows), increases in interest rates naturally lift the discount factors applied to the expected cash flows and thus cause a loss. The longer the maturity of a certain cash flow and the higher the move in the discount factor, the higher will be the loss. Upside surprises in inflation, fiscal funding needs, and FX depreciation rates are among the most common adverse macroeconomic shocks to receivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation (including changes in assets holding limits for different types of investors), changes in tax policies, currency convertibility (which may constrain currency conversion, repatriation of profits and/or liquidation of positions), and settlement issues related to local clearing houses are also important risk factors. The sensitivity of fixed-income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to FX depreciation, or to specified interest rates - these are common in emerging markets. The index fixings may - by construction - lag or mis-measure the actual move in the underlying variables they are intended to track. The choice of the proper fixing (or metric) is particularly important in swaps markets, where floating coupon rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. Funding in a currency that differs from the currency in which coupons are denominated carries FX risk. Options on swaps (swaptions) the risks typical to options in addition to the risks related to rates movements. Derivative transactions involve numerous risks including market, counterparty default and illiquidity risk. The appropriateness 27 July 2021 Germany Blog Page 8 Deutsche Bank AG of these products for use by investors depends on the investors' own circumstances, including their tax position, their regulatory environment and the nature of their other assets and liabilities; as such, investors should take expert legal and financial advice before entering into any transaction similar to or inspired by the contents of this publication. The risk of loss in futures trading and options, foreign or domestic, can be substantial. As a result of the high degree of leverage obtainable in futures and options trading, losses may be incurred that are greater than the amount of funds initially deposited - up to theoretically unlimited losses. Trading in options involves risk and is not suitable for all investors. Prior to buying or selling an option, investors must review the 'Characteristics and Risks of Standardized Options", at http://www.optionsclearing.com/ about/publications/character-risks.jsp . If you are unable to access the website, please contact your Deutsche Bank representative for a copy of this important document. Participants in foreign exchange transactions may incur risks arising from several factors, including the following: (i) exchange rates can be volatile and are subject to large fluctuations; (ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government-imposed exchange controls, which could affect the value of the currency. Investors in securities such as ADRs, whose values are affected by the currency of an underlying security, effectively assume currency risk. Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in the investor's home jurisdiction. Aside from within this report, important conflict disclosures can also be found at https:// research.db.com/Research/ on each company's research page. Investors are strongly encouraged to review this information before investing. Deutsche Bank (which includes Deutsche Bank AG, its branches and affiliated companies) is not acting as a financial adviser, consultant or fiduciary to you or any of your agents (collectively, "You" or "Your") with respect to any information provided in this report. Deutsche Bank does not provide investment, legal, tax or accounting advice, Deutsche Bank is not acting as your impartial adviser, and does not express any opinion or recommendation whatsoever as to any strategies, products or any other information presented in the materials. Information contained herein is being provided solely on the basis that the recipient will make an independent assessment of the merits of any investment decision, and it does not constitute a recommendation of, or express an opinion on, any product or service or any trading strategy. The information presented is general in nature and is not directed to retirement accounts or any specific person or account type, and is therefore provided to You on the express basis that it is not advice, and You may not rely upon it in making Your decision. The information we provide is being directed only to persons we believe to be financially sophisticated, who are capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies, and who understand that Deutsche Bank has financial interests in the offering of its products and services. If this is not the case, or if You are an IRA or other retail investor receiving this directly from us, we ask that you inform us immediately. In July 2018, Deutsche Bank revised its rating system for short term ideas whereby the branding has been changed to Catalyst Calls ("CC") from SOLAR ideas; the rating categories for Catalyst Calls originated in the Americas region have been made consistent with the categories used by Analysts globally; and the effective time period for CCs has been reduced from a maximum of 180 days to 90 days. United States : Approved and/or distributed by Deutsche Bank Securities Incorporated, a member of FINRA, NFA and SIPC. Analysts located outside of the United States are employed by non-US affiliates that are not subject to FINRA regulations. European Economic Area (exc. United Kingdom) : Approved and/or distributed by Deutsche Bank AG, a joint stock corporation with limited liability incorporated in the Federal Republic of Germany with its principal office in Frankfurt am Main. Deutsche Bank AG is authorized under German Banking Law and is subject to supervision by the European Central Bank and by BaFin, Germany's Federal Financial Supervisory Authority. United Kingdom : Approved and/or distributed by Deutsche Bank AG acting through its London Branch at Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG in the United Kingdom is authorised by the Prudential Regulation Authority and is subject to limited regulation by the Prudential Regulation Authority and Financial Conduct Authority. Details about the extent of our authorisation and regulation are available on request. Hong Kong SAR : Distributed by Deutsche Bank AG, Hong Kong Branch, except for any research content relating to futures contracts within the meaning of the Hong Kong Securities and Futures Ordinance Cap. 571. Research reports on such futures contracts are not intended for access by persons who are located, incorporated, constituted or resident in Hong Kong. The author(s) of a research report may not be licensed to carry on regulated activities in Hong Kong, and if not licensed, do not hold themselves out as being able to do so. The provisions set out above in the 'Additional Information' section shall apply to the fullest extent permissible by local laws and regulations, including without limitation the Code of Conduct for Persons Licensed or Registered with the Securities and Futures Commission. This report is intended for distribution only to 'professional investors' as defined in Part 1 of Schedule of the SFO. This document must not be acted or relied on by persons who are not professional investors. Any investment or investment activity to which this document relates is only available to professional investors and will be engaged only with professional investors. India : Prepared by Deutsche Equities India Private Limited (DEIPL) having CIN: U65990MH2002PTC137431 and registered office at 14th Floor, The Capital, C-70, G Block, Bandra Kurla Complex Mumbai (India) 400051. Tel: + 91 22 7180 4444. It is registered by the Securities and Exchange Board of India (SEBI) as a Stock broker bearing registration no.: INZ000252437; 27 July 2021 Germany Blog Deutsche Bank AG Page 9 Merchant Banker bearing SEBI Registration no.: INM000010833 and Research Analyst bearing SEBI Registration no.: INH000001741. DEIPL may have received administrative warnings from the SEBI for breaches of Indian regulations. Deutsche Bank and/or its affiliate(s) may have debt holdings or positions in the subject company. With regard to information on associates, please refer to the "Shareholdings" section in the Annual Report at: https://www.db.com/ir/en/annual reports.htm . Japan : Approved and/or distributed by Deutsche Securities Inc.(DSI). Registration number - Registered as a financial instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA, Type II Financial Instruments Firms Association and The Financial Futures Association of Japan. Commissions and risks involved in stock transactions - for stock transactions, we charge stock commissions and consumption tax by multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to losses as a result of share price fluctuations and other factors. Transactions in foreign stocks can lead to additional losses stemming from foreign exchange fluctuations. We may also charge commissions and fees for certain categories of investment advice, products and services. Recommended investment strategies, products and services carry the risk of losses to principal and other losses as a result of changes in market and/or economic trends, and/or fluctuations in market value. Before deciding on the purchase of financial products and/or services, customers should carefully read the relevant disclosures, prospectuses and other documentation. 'Moody's', 'Standard Poor's', and 'Fitch' mentioned in this report are not registered credit rating agencies in Japan unless Japan or 'Nippon' is specifically designated in the name of the entity. Reports on Japanese listed companies not written by analysts of DSI are written by Deutsche Bank Group's analysts with the coverage companies specified by DSI. Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Law of Japan. Target prices set by Deutsche Bank's equity analysts are based on a 12-month forecast period.. Korea : Distributed by Deutsche Securities Korea Co. South Africa : Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch Register Number in South Africa: 1998/003298/10). Singapore: This report is issued by Deutsche Bank AG, Singapore Branch (One Raffles Quay #18-00 South Tower Singapore 048583, 65 6423 8001), which may be contacted in respect of any matters arising from, or in connection with, this report. Where this report is issued or promulgated by Deutsche Bank in Singapore to a person who is not an accredited investor, expert investor or institutional investor (as defined in the applicable Singapore laws and regulations), they accept legal responsibility to such person for its contents. Taiwan : Information on securities/investments that trade in Taiwan is for your reference only. Readers should independently evaluate investment risks and are solely responsible for their investment decisions. Deutsche Bank research may not be distributed to the Taiwan public media or quoted or used by the Taiwan public media without written consent. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation to trade in such securities/instruments. Deutsche Securities Asia Limited, Taipei Branch may not execute transactions for clients in these securities/instruments. Qatar : Deutsche Bank AG in the Qatar Financial Centre (registered no. 00032) is regulated by the Qatar Financial Centre Regulatory Authority. Deutsche Bank AG - QFC Branch may undertake only the financial services activities that fall within the scope of its existing QFCRA license. Its principal place of business in the QFC: Qatar Financial Centre, Tower, West Bay, Level 5, PO Box 14928, Doha, Qatar. This information has been distributed by Deutsche Bank AG. Related financial products or services are only available only to Business Customers, as defined by the Qatar Financial Centre Regulatory Authority. Russia : The information, interpretation and opinions submitted herein are not in the context of, and do not constitute, any appraisal or evaluation activity requiring a license in the Russian Federation. Kingdom of Saudi Arabia : Deutsche Securities Saudi Arabia LLC Company (registered no. 07073-37) is regulated by the Capital Market Authority. Deutsche Securities Saudi Arabia may undertake only the financial services activities that fall within the scope of its existing CMA license. Its principal place of business in Saudi Arabia: King Fahad Road, Al Olaya District, P.O. Box 301809, Faisaliah Tower - 17th Floor, 11372 Riyadh, Saudi Arabia. United Arab Emirates : Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated by the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch may only undertake the financial services activities that fall within the scope of its existing DFSA license. Principal place of business in the DIFC: Dubai International Financial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been distributed by Deutsche Bank AG. Related financial products or services are available only to Professional Clients, as defined by the Dubai Financial Services Authority. Australia and New Zealand : This research is intended only for 'wholesale clients' within the meaning of the Australian Corporations Act and New Zealand Financial Advisors Act, respectively. Please refer to Australia-specific research disclosures and related information at https://australia.db.com/australia/content/research-information.html Where research refers to any particular financial product recipients of the research should consider any product disclosure statement, prospectus or other applicable disclosure document before making any decision about whether to acquire the product. In preparing this report, the primary analyst or an individual who assisted in the preparation of this report has likely been in contact with the company that is the subject of this research for confirmation/clarification of data, facts, statements, permission to use company-sourced material in the report, and/or site-visit attendance. Without prior approval from Research Management, analysts may not 27 July 2021 Germany Blog Page 10 Deutsche Bank AG accept from current or potential Banking clients the costs of travel, accommodations, or other expenses incurred by analysts attending site visits, conferences, social events, and the like. Similarly, without prior approval from Research Management and Anti-Bribery and Corruption ("ABC") team, analysts may not accept perks or other items of value for their personal use from issuers they cover. Additional information relative to securities, other financial products or issuers discussed in this report is available upon request. This report may not be reproduced, distributed or published without Deutsche Bank's prior written consent. Backtested, hypothetical or simulated performance results have inherent limitations. Unlike an actual performance record based on trading actual client portfolios, simulated results are achieved by means of the retroactive application of a backtested model itself designed with the benefit of hindsight. Taking into account historical events the backtesting of performance also differs from actual account performance because an actual investment strategy may be adjusted any time, for any reason, including a response to material, economic or market factors. The backtested performance includes hypothetical results that do not reflect the reinvestment of dividends and other earnings or the deduction of advisory fees, brokerage or other commissions, and any other expenses that a client would have paid or actually paid. No representation is made that any trading strategy or account will or is likely to achieve profits or losses similar to those shown. Alternative modeling techniques or assumptions might produce significantly different results and prove to be more appropriate. Past hypothetical backtest results are neither an indicator nor guarantee of future returns. Actual results will vary, perhaps materially, from the analysis. The method for computing individual E,S,G and composite ESG scores set forth herein is a novel method developed by the Research department within Deutsche Bank AG, computed using a systematic approach without human intervention. Different data providers, market sectors and geographies approach ESG analysis and incorporate the findings in a variety of ways. As such, the ESG scores referred to herein may differ from equivalent ratings developed and implemented by other ESG data providers in the market and may also differ from equivalent ratings developed and implemented by other divisions within the Deutsche Bank Group. Such ESG scores also differ from other ratings and rankings that have historically been applied in research reports published by Deutsche Bank AG. Further, such ESG scores do not represent a formal or official view of Deutsche Bank AG. It should be noted that the decision to incorporate ESG factors into any investment strategy may inhibit the ability to participate in certain investment opportunities that otherwise would be consistent with your investment objective and other principal investment strategies. The returns on a portfolio consisting primarily of sustainable investments may be lower or higher than portfolios where ESG factors, exclusions, or other sustainability issues are not considered, and the investment opportunities available to such portfolios may differ. Companies may not necessarily meet high performance standards on all aspects of ESG or sustainable investing issues; there is also no guarantee that any company will meet expectations in connection with corporate responsibility, sustainability, and/or impact performance. Copyright © 2021 Deutsche Bank AG David Folkerts-Landau Group Chief Economist and Global Head of Research Pam Finelli Global Chief Operating Officer Research Steve Pollard Global Head of Company Research and Sales Anthony Klarman Global Head of Debt Research Michael Spencer Head of APAC Research Andreas Neubauer Head of Germany Research Gerry Gallagher Head of European Company Research Matthew Barnard Head of Americas Company Research Tim Rokossa Head of German Company Research Peter Milliken Head of APAC Company Research Jim Reid Global Head of Thematic Research Francis Yared Global Head of Rates Research George Saravelos Global Head of FX Research Peter Hooper Global Head of Economic Research International Production Locations Deutsche Bank AG Deutsche Bank Place Level 16 Corner of Hunter & Phillip Streets Sydney, NSW 2000 Australia Tel: (61) 2 8258 1234 Deutsche Bank AG Equity Research Mainzer Landstrasse 11-17 60329 Frankfurt am Main Germany Tel: (49) 69 910 00 Deutsche Bank AG Filiale Hongkong International Commerce Centre, 1 Austin Road West,Kowloon, Hong Kong Tel: (852) 2203 8888 Deutsche Securities Inc. 2-11-1 Nagatacho Sanno Park Tower Chiyoda-ku, Tokyo 100-6171 Japan Tel: (81) 3 5156 6000 Deutsche Bank AG 1 Great Winchester Street London EC2N 2EQ United Kingdom Tel: (44) 20 7545 8000 Deutsche Bank Securities Inc. 60 Wall Street New York, NY 10005 United States of America Tel: (1) 212 250 2500
19.5.0