20171208-法国巴黎银行-EM_TODAY_7页_235kb

EM STRATEGY DAILY SUMMARY - 08 December 2017

Core Content

This document provides a summary of the Emerging Markets (EM) strategy for the day, focusing on currency and interest rate movements in key markets such as Turkey, Egypt, Mexico, and Asia. It also includes a list of EM strategy contacts and legal disclosures regarding the use and distribution of the report.

Key Market Insights

Turkey (TRY)

• Weekly returns: The TRY peaked at 3.2% this week, which is unusual given the recent downward trend.
• Forward returns: Realised forward returns for 1-month remain at -12%, indicating ongoing currency weakness.
• CBRT rate decision: The upcoming rate decision on 14 December is critical for restoring investor confidence. The report expects a 75bp hike in the late-liquidity window and a 50bp increase in the average report rate.
• Strategy recommendation: The CBRT's decision may disappoint markets, leading to further currency weakness.

Egypt

• Fiscal data: The budget deficit for Q1 of FY 2017/18 declined to 2% of GDP, driven by a 51.5% increase in tax revenues.
• Growth outlook: The government is targeting a 5–5.25% GDP growth rate for FY 2017/18.
• Moody's rating review: Moody's is reviewing Egypt's B3 rating with a stable outlook. No significant change is expected at this time.
• Inflation data: Hungary's November CPI is expected to rise to 2.7% y/y from 2.2% y/y in October.

Mexico

• CPI inflation: November CPI increased to 6.6% y/y, higher than market expectations.
• TIIE curve impact: The upside surprise in inflation has put pressure on the front-end of the TIIE curve.
• Strategy recommendation: Buy Jun19 UDIBonus and switch out of the 18-month TIIE receiver.

Asia

• China trade data: Strong trade data supports the view of robust growth prospects for Asian economies in the coming year.
• EM FX: EM currencies are weaker as the USD continues to rise, recording a positive weekly return.

Strategy Contacts

Main Views

• Reflation trade continues: The global reflation trade is ongoing, with DM equities benefiting from the recent correction in USTs.
• Positive returns in EM: For positive returns to persist and restore investor confidence in EM currencies, the CBRT's rate decision is pivotal.
• Investor confidence: The report emphasizes the need for the CBRT to deliver a rate hike that aligns with market expectations to prevent further currency weakness.
• Fiscal and inflation data: Positive fiscal data from Egypt and higher-than-expected inflation in Mexico are influencing market sentiment and affecting yield curves.

Legal and Compliance Information

• The document is non-independent research and intended as a marketing communication.
• It does not constitute investment research or financial advice.
• Conflicts of interest: BNP Paribas may have financial interests in the issuers or securities mentioned and may engage in transactions inconsistent with the views expressed.
• Confidentiality: The document is provided on a strictly confidential basis and may not be shared without prior consent.
• Disclaimers: No guarantees are made regarding the accuracy or completeness of the information, and past performance is not indicative of future results.
• Regulatory compliance: The document is subject to various regulatory frameworks across jurisdictions, including MiFID, UK FCA, and EU directives.

Summary

This report outlines the current state of EM FX and interest rate markets, with a focus on Turkey, Egypt, and Mexico. It highlights the importance of upcoming rate decisions and market data in shaping investor sentiment and currency movements. The document also includes a comprehensive list of EM strategy contacts and detailed legal notices to ensure compliance with financial regulations.