20171220-法国巴黎银行-EM_TODAY_8页_242kb

EM Strategy Daily Summary - 20 December 2017

Core Content Overview

This document is a summary of the Emerging Markets (EM) Strategy Daily report from BNP Paribas, highlighting key market developments and strategic positions across various regions, including CEEMEA, Latam, and Asia. It also includes legal notices and disclosures relevant to the use of the document and the services provided.

Key Market Developments

South Africa

• Interest Rate Recommendation: The strategy team recommended receiving 1y1y rates at 7.70, which has now reached the target of 7.20.
• Rationale: The local interest rate premium was considered too high relative to the country's funding needs, leading to a significant rally of over 50 basis points (bps).
• FX Position: Despite the rate move, the team advises against being outright long ZAR vs. USD due to extreme realised forward returns (5.6% for 1-week and 9.7% for 1-month), suggesting mean reversion is likely.

Brazil

• FX Position Adjustment: The team rolled over its existing one-touch FX position, selling the USDBRL one-touch at 3.10 maturing on 26 Jan 2018 and buying a one-touch at 3.12 maturing on 19 Mar 2018.
• Reasoning: The BRL is deemed cheap compared to in-house fair value models, and the new trade is intended to capture positive tail risks from political and reform developments in December 2017 and Q1 2018.

Asia

• USD FX Performance: A weaker USD lifted Asian FX markets this morning.
• Thailand: The Bank of Thailand kept policy rates unchanged, as expected, due to inflation and GDP trends aligned with global growth.
• Malaysia: November CPI data came in at 3.4% y/y, remaining above the central bank’s comfort range of 2-3%. A 25bp rate hike to 3.25% is expected at the next MPC meeting on 25 January.

Saudi Arabia

• 2018 Budget Outlook: The budget is expected to be more expansionary compared to 2017, with spending increasing to 1.1tn riyals (USD 293bn) from 926bn riyals (USD 247bn).
• Growth Forecast: Projected growth for 2018 is 2.7%, significantly higher than the -0.5% decline in 2017.
• Funding Sources: The 2018 budget will be funded 50% from oil revenues, 30% from non-oil revenues, 12% from debt, and 8% from government balances.
• Budget Deficit: Expected to narrow to 7.3% GDP from 9% in 2017.
• Figure 1 and 2: Highlight historical and projected budget data, with 2018 figures being projections.

Strategic Adjustments and Positions

• South Africa: The team has reached their target rate for the 1y1y recommendation.
• Brazil: Adjusted the USDBRL one-touch position to align with the team's view on the BRL's valuation and potential for positive outcomes in the near term.
• Thailand and Malaysia: Policy rates remain unchanged, with inflationary pressures and growth expectations influencing the central banks’ decisions.

Key Contacts

Legal and Compliance Notes

• Non-Independent Research: This document is non-independent research and is not intended to be investment advice.
• Conflicts of Interest: The strategy teams may have conflicts of interest due to their interaction with sales and trading.
• Marketing Communication: It is a marketing communication and not investment research.
• Confidentiality: The document is provided on a strictly confidential basis and must not be copied, reproduced, or distributed without prior written consent.
• Risk Disclaimer: The document does not constitute an offer to sell or purchase any financial instruments and does not guarantee future performance. It includes simulated performance data and is not a prospectus or public offering.
• Disclosure of Activities: BNP Paribas may have financial interests in the issuers mentioned, including acting as a market maker, advisor, or underwriter.

Important Disclosures

• Options: Complex instruments not suitable for all investors; may involve high risk.
• ETFs: Carry risks including tracking error, currency, and geopolitical risks.
• Convertible Securities: May not be registered under US Securities Laws and are considered restricted securities.
• Regulatory Information: The document is subject to various regulatory frameworks in different jurisdictions, including the UK, France, Germany, Belgium, Ireland, Italy, Netherlands, and Portugal.