􀀗 Globally, we estimate governments
have allocated over USD445bn to boost
investment in a low-carbon recovery, an
issue on the agenda of the G20 summit
on 2 April
􀀗 Key beneficiaries include rail, water
infrastructure, grid expansion and
improved building efficiency; renewable
energy has received limited support to
date, except in the US
􀀗 Given weak project finance markets, our
conviction calls are lower-beta, better
capitalised, integrated and diversified
players that are better able to weather the
financing storm than smaller pure stocks
Introducing our first climate change
equity conviction calls
Following the recent introduction of the HSBC Climate Service
for investors, we now introduce our universe of climate change
stocks. These are pure-play and diversified stocks from our
global equity research coverage universe that derive a
meaningful portion of their revenues from business
opportunities related to climate change – a total of 64 stocks in
four different regions. In the first of a regular series of notes
highlighting global equity market opportunities from climate
change and resultant government policies, we review the
stimulus packages of the G20, entailing support measures
totalling USD2.9trn, over USD445bn of which is destined for
the ‘green’ economy in its broadest sense, we estimate.
The key beneficiaries in sector terms are capital goods,
construction and rail; our key Overweight ratings are
Schneider Electric (Overweight (V), TP EUR65), ABB
(Overweight (V), CHF20), Siemens (Overweight, EUR70),
China Railway Construction (Overweight (V), HKD13),
China Communications Construction (Overweight (V),
HKD11.74), Faiveley (Overweight (V), EUR60), Vossloh
(Overweight (V), EUR103). In renewables we like defensive
utility names like Iberdrola Renovables (Overweight (V),
EUR3.65) and EDF EN (Overweight (V), EUR35). Key
Underweights: SMA Solar (Underweight (V), EUR28) and
Centrotherm (Underweight (V), EUR14).

Summary and investment
conclusions 3
The green deal gets real 3
China and the US lead 4
Key stock market conclusions 4
Automotive 5
Capital goods 5
Railways 5
Renewables 5
HSBC Climate Service 6
Greening the stimulus 7
More money on the table 7
China and the US lead 8
Allocating the stimulus 9
Timing the stimulus 11
Multiplying the impact 11
The next instalment? 11
Climate change investing –
equity strategy view 13
A volatile climate 13
Automobiles 17
Sector implications 17
Scrapping schemes bring forward demand 19
Volkswagen preference shares (VOWG_p.DE):
Overweight (V), TP EUR53 20
Peugeot: Underweight (V), target price: EUR11 21
Capital goods 24
Green stimulus exposure 24
High conviction ideas 25
China infrastructure
construction 34
Sector view 34
Order flow continues 34
Key Overweights 35
Railway industry 37
Investment summary and conclusion 37
2009 outlook: picking up momentum 37
Sector analysis 39
High conviction ideas 39
Solar 41
Sector implications of green recovery plans 41
Sector investment stance 42
Further future developments 43
High conviction ideas 43
SolarWorld: Overweight (V), target price EUR23 43
SMA Solar: Underweight (V), target price EUR28 44
Centrotherm: Underweight (V), target price EUR14 45
Wind sector 47
EU: still a climate leader 48
Sector investment stance 48
High conviction ideas 49
Climate Change Company
Coverage List 53
Disclosure appendix 57
Disclaimer 60