20180619-法国巴黎银行-EM_TODAY_9页_307kb

EM STRATEGY | DAILY Summary

Core Content

This document provides an overview of emerging market (EM) strategy and market conditions for 19 June 2018, highlighting key developments in Asia, CEEMEA, and Latin America. It also includes contact details for EM strategy teams and legal disclaimers related to the content and use of the document.

Main Points

US-China Trade Tensions

• US President Donald Trump has instructed the US Trade Representative's office to identify USD 200bn in Chinese imports for additional $10% tariffs.
• If China retaliates, another USD 200bn in tariffs may be imposed.
• Asian equity and FX markets have weakened further due to the escalation of protectionist rhetoric.
• Markets in China, Hong Kong, and Taiwan have been most affected, with the Shangai Shenzen CSI 300 Index down 4.5%.
• This may signal the start of a prolonged trade dispute between the US and China, leading to near-term USD/Asia weakness.

CEEMEA Market Outlook

• The central bank of Hungary (MNB) is expected to keep rates on hold at its policy meeting.
• The MNB will also publish its inflation report and updated macroeconomic forecasts.
• Despite a 4% recent sell-off in the HUF, the pass-through effect from FX rates to consumer prices is relatively low.
• The dovish ECB statement from the previous week suggests the MNB will not adopt a hawkish tone in the current meeting.
• In Poland, May wage growth was 7.0% y/y, slightly lower than April's 7.8%, but still 3% higher than the same period last year.
• The upward trend in wage data is expected to feed through to CPI in the first half of 2019, potentially opening up opportunities for monetary tightening.

Latin America Strategy

• A formal framework to test the efficiency of FX intervention is introduced.
• Temporary shocks to the exchange rate may warrant intervention, but permanent shocks to monetary conditions or terms of trade should not be offset by intervention unless they trigger disruptive overshooting.
• The technical note titled "Is there an optimal FX intervention strategy? The answer is no" provides detailed insights into this topic.

Brazil Market Activity

• The Brazilian National Treasury (BNT) has continued with daily bond buy-back auctions and cancelled this week's auctions.
• BNT has withdrawn USD 1.2mn DV01 through these auctions, reinforcing the view that the DI curve offers plenty of opportunities, especially FRAs in the belly of the curve.
• The bond buy-back program is seen as a monetary policy tool to manage currency appreciation and interest rate expectations.

Key Contacts

Legal Disclaimer

• This document is non-independent research and may be subject to conflicts of interest.
• It is not investment research under MiFID II and is not intended for retail investors.
• It may contain "Research" as defined under MiFID II unbundling rules, which is only available to qualified clients.
• BNP Paribas may make a market in or engage in transactions related to the securities or derivatives mentioned.
• No liability is accepted for any loss or damage arising from reliance on the document.
• The indicative prices and performance data are not actual transaction terms and are subject to change.
• The document is for informational purposes only and should not be used as a basis for investment decisions.
• Prior to any transaction, it is essential to consult with independent advisors and ensure compliance with local laws.

Additional Information

• The BNP Paribas Global Markets Website and Strategy Website are provided for further details.
• Bloomberg is referenced for Fixed Income Research, G10 Interest Rate Research, and Emerging Markets Research.
• The document is strictly confidential and may not be distributed without prior written consent.
• It is intended for professional clients and eligible counterparties only.

Conclusion

The document emphasizes the impact of US-China trade tensions on Asian markets, the potential for monetary tightening in Poland due to wage growth, and the framework for FX intervention in Latin America. It also outlines current market strategies in Brazil and provides contact details for the EM strategy team. The legal disclaimers highlight the non-independent nature of the research and the confidentiality and liability limitations associated with the document.