高盛-新兴市场-投资策略-“银行”对新兴市场国内经济增长的影响-20180129-25页_1mb

EM Strategy Views Summary

Core Content

This document provides an analysis of Emerging Market (EM) bank stocks, focusing on their performance relative to interest rates and domestic growth cycles. It outlines the differing dynamics between EM and Developed Market (DM) banks, and highlights specific countries where EM banks are expected to outperform in 2018.

Main Points

1. EM and DM Interest Rate Dynamics

• Reflation Divergence: In EM, reflation has led to strong performance in both equities and bonds, unlike in DM where it typically supports a long equity and short bond trade.
• Interest Rate Stability: EM local interest rates have remained stable despite the rise in US rates, partly due to improved fundamentals and reduced vulnerability to USD funding costs.
• Yield Curve Steepening: The EM yield curve has steepened, with front-end rates decreasing and long-end rates relatively flat, impacting EM bank equity performance differently than in DM.

2. Bank Equity Performance and Interest Rates

• DM Banks: Bank stocks in DM trade closely with the yield curve, with performance tied to net interest margins.
• EM Banks: EM bank stocks are more influenced by interest rate levels rather than the yield curve. Their performance is driven more by loan growth than by margin changes.
• Correlation Variability: The relationship between EM bank performance and interest rates varies by market, with high-yielding EMs showing inverse correlation and low-yielding EMs showing similar trends to DM.

3. EM Banks as a Growth Indicator

• Growth Cycle Exposure: EM banks are seen as a proxy for domestic growth, with their relative performance aligning with the growth cycle.
• Valuation Advantage: EM banks are relatively undervalued compared to broader EM indices in 12 of 18 major markets, making them an attractive investment.
• Underperformance in 2017: Despite EM growth, banks underperformed due to the dominance of Information Technology (IT) stocks, which have a higher share of MSCI EM.

4. Preferred Markets

• Favored Countries: Banks in Brazil, Russia, South Africa, India, and Mexico are favored due to potential rate cuts and improving domestic growth.
• Performance in Brazil and Russia: These countries have seen consistent outperformance during rate cutting cycles.
• South Africa: Banks are expected to outperform due to improving economic conditions and currency strength.
• Cautious on Turkey: Due to inflationary pressures and weak inflation targeting by the central bank, the banking sector in Turkey is viewed with caution.

Key Information

• Valuation Metrics: EM banks appear more attractive in terms of valuation compared to local equity indices, except in the Philippines.
• Earnings Growth: EM banks are expected to benefit from rising credit growth and consumer activity.
• Policy Outlook: Central banks in several EMs are expected to cut rates, which could further stimulate bank performance.
• Investment Strategy: The document recommends a rotation from IT to banks in 2018, especially in markets with growth potential and room for rate easing.

Appendix Highlights

• Macro Forecasts: The document includes macroeconomic forecasts for EM countries, such as GDP growth, inflation, and policy rates.
• Valuation Table: A table comparing EM bank valuations, including P/E, P/B, and D/Y metrics, along with earnings growth estimates.
• Cross-Asset Valuation: A table showing the relative valuation of EM assets, including equities, FX, credit, and bonds.
• Fund Flows: Information on EM mutual fund flows and cross-asset positioning is provided, indicating investor sentiment and allocation trends.

Conclusion

The document suggests that EM bank stocks are poised for outperformance in 2018, driven by improving domestic growth, favorable valuation levels, and potential rate cuts in certain markets. However, it warns against overexposure to IT stocks and advises caution in Turkey due to persistent inflationary pressures.