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EM STRATEGY | DAILY - 17 July 2018 Summary

Core Content

This document provides an overview of the emerging markets (EM) strategy and market insights from BNP Paribas for 17 July 2018. It includes analysis on oil prices, China's economic performance, Turkey's growth outlook, and additional details on EM research contacts and legal disclosures.

Key Market Insights

• Oil Prices:

  • The West Texas Intermediate (WTI) Crude Oil benchmark fell to USD 68 per barrel.
  • This decline was driven by increased supply from Saudi Arabia.
  • The Indian Rupee (INR), a net importer of oil, opened stronger in sympathy with the falling oil prices.

• China's Economic Performance:

  • China's GDP growth for Q2 2018 was 6.7% y/y.
  • This marks the 14th consecutive quarter of growth within the 6.7–7.0% range.
  • The slowdown is attributed to financial deleveraging and efforts to curb local government debt.
  • The research team has analyzed the implications of a US-China trade war, assigning probabilities to various scenarios.
  • The team expects further slowing in H2 2018 due to trade war uncertainty and the lagging effects of credit tightening and property cooling measures.

• Turkey's Economic Outlook:

  • The IMF downgraded Turkey's 2018 growth rate to 4.2% from 4.4% previously.
  • The employment outlook indicates a slowdown, with the seasonally adjusted unemployment rate rising from 9.9% in March to 10.3% in April.
  • This breaks a trend of improvement since 2016 and is attributed to higher interest rates, FX volatility, and policy uncertainty.
  • Domestic manufacturing orders have stagnated, but robust export manufacturing orders and improving tourism revenues suggest a potential "soft landing".
  • The report is slightly more optimistic, expecting 4.5% growth for the year.

Key Contacts

Additional Information

• Bond Market Guide for India:

  • Published as the second in the series after the China edition.
  • Covers market dynamics, policy framework, and access channels for foreign investors.

• Asia Market Update:

  • Non-oil Domestic Exports (NODX) in Singapore expanded by 1.1% y/y, below market expectations of 7.8%.
  • Electronic exports fell by 7.9% y/y.

Legal and Regulatory Disclosures

• The document is a marketing communication and non-independent research under MiFID II.
• It does not constitute investment research and is not subject to the independence requirements of investment research.
• It may contain Research as defined under MiFID II unbundling rules, intended only for firms that have signed up to BNP Paribas Global Markets Research packages or are out of scope of the unbundling rules.
• No liability is accepted for any direct or consequential loss arising from the use of the document.
• The indicative prices provided are based on internal models and may vary significantly from other sources.
• The document may include performance data based on back-testing, which is for illustrative purposes only and does not reflect actual market conditions.
• The information is for informational purposes only and should not be relied upon as authoritative.
• No investment, financial, legal, or tax advice is provided.

US Disclosures

• Options:

  • Complex instruments not suitable for all investors.
  • May involve high risk and are only appropriate for sophisticated investors.
  • Option risk disclosure documents are required for access to such information.

• ETFs:

  • Carry general risks, including tracking error, currency, and geopolitical risks.
  • BNPP may act as an Authorized Participant, market maker, or advisor, leading to potential conflicts of interest.

• Unregistered Securities:

  • Some securities discussed may not be registered under US securities laws and are considered "restricted securities" under Rule 144A or Regulation S.
  • Only Qualified Institutional Buyers or non-US persons may be eligible to purchase these instruments.

Distribution and Authorization

• The document is distributed by BNP Paribas in accordance with applicable laws and regulations.
• It is intended for professional clients and eligible counterparties.
• The report is produced by BNP Paribas London Branch, Singapore Branch, and Brasil S.A.
• Legal notices and disclosures are provided for each jurisdiction, including the UK, France, Germany, Belgium, Ireland, and Italy.