巴黎银行-新兴市场-宏观策略-新兴市场货币政策展望：超越美联储-20190801-8页_2mb

EM Monetary Policy Outlook Summary

Core Content

This document provides an outlook on emerging market (EM) monetary policy in the context of global easing, particularly highlighting the impact of the Federal Reserve's (Fed) rate cut and the broader trend of rate reductions across EM regions. It outlines the expectations for EM central banks, the reasons behind the rate-cutting momentum, and the implications for investors.

Key Messages

• Fed's Rate Cut and Global Context: The Fed's first rate cut in a decade, despite a hawkish press conference, signals a broader trend of global monetary easing, which is beneficial for EMs.
• Rate-Cutting Momentum in EMs: At least 14 EM central banks are expected to cut rates before year-end, with further easing anticipated from those that have already begun.
• Local Conditions Support Easing: EMs are experiencing lower inflation, weaker GDP growth, and improved policy frameworks, which are driving the rate-cutting cycle.
• Regional Analysis: The document breaks down the expected monetary policy actions in different EM regions, including Latin America, EM Asia, Central and Eastern Europe (CEE), and the Gulf Cooperation Council (GCC).

Main Views

Latin America (Latam)

• Brazil: Expected to implement aggressive rate cuts of 50bp.
• Chile and Mexico: Likely to cut rates in September.
• Argentina: Tied to a volatile ARS due to high-stake elections in October, may not cut rates.
• Colombia: May avoid rate cuts if the Bank of Colombia (BanRep) remains cautious about inflation and current account deficits.

EM Asia

• Trade Tensions: Weakness in China's manufacturing sector may affect EMs reliant on trade with China.
• Rate Cuts: A lower Fed funds rate could trigger rate cuts in Indonesia, India, Thailand, South Korea, Philippines, and Malaysia.

Central and Eastern Europe (CEE)

• Inflation Concerns: Poland and Romania are expected to see higher inflation in the coming months, but it is likely viewed as temporary.
• Monetary Policy: ECB easing is expected to prevent rate hikes in Poland, Romania, and the Czech Republic, with limited normalization in Hungary.

Gulf Cooperation Council (GCC)

• Synchronized Cuts: GCC countries are likely to follow the Fed's lead and cut rates in line with its actions.

South Africa

• Further Easing: Expected to cut another 25bp in November, supported by falling inflation and high unemployment.

Turkey

• Aggressive Cuts: The Central Bank of the Republic of Turkey (CBRT) is expected to cut an additional 375bp by end-2019, with 200bp penciled in for September, and another 200bp in 2020.

Egypt

• Disinflation: Expected to cut 100bp in September, another 100bp later in the year, with further easing in 2020.

Supporting Factors for EM Easing

• Inflation and Growth Trends: Inflation and GDP growth expectations are falling across EMs, supporting further rate cuts.
• Current Account Deficits: Narrowing current account deficits provide more room for monetary stimulus.
• Foreign Reserves and Non-Resident Flows: EMs have improved their external buffers and are expected to see increased non-resident inflows.
• Policy Frameworks: Enhanced monetary policy credibility and autonomy in some EMs have led to lower neutral policy rates.

Investment Implications

• Relative-Value Strategies: Preferred over outright long positions in EM assets, especially in high-yield currencies like Brazil, while avoiding currencies with high vulnerability (e.g., TRY, ARS, ZAR) and low carry (e.g., CE3, CLP, PEN).
• Interest Rate Positions: Investors may consider paying short-end rates and receiving longer-term yields, or using a spread US swaps basis for certain markets.

Figures and Data

• Fig. 1: Market-implied policy rate changes for 16 EMs over the next 12 months.
• Fig. 2: Average policy rate in EMs with 12-month forecasts.
• Fig. 3: BNPP's forecast for policy rate changes in EMs from August 2019 to December 2020.
• Fig. 4: EM core CPI trends showing a slowdown.
• Fig. 5: Changes in current-account balances and non-resident flows in EMs.

Disclaimer and Legal Information

• The document is not investment research and is considered a marketing communication under MiFID II.
• It is intended for professional clients and eligible counterparties.
• BNPP may have conflicts of interest due to its involvement in investment banking and trading activities.
• It does not constitute a prospectus or an official transaction confirmation.
• Information is based on public sources and may not be independently verified.
• The document includes performance data based on back-testing, which is for illustrative purposes only.
• The document may contain restricted securities, which are only available to Qualified Institutional Buyers (QIBs) or non-US persons.

US Disclosures

• Options: Complex instruments with high risk, suitable only for sophisticated investors.
• ETFs: Carry risks including tracking error, currency, and geopolitical risks.
• Convertibles and Unregistered Securities: May not be registered under US securities laws and are subject to Rule 144A or Regulation S.

Distribution and Jurisdiction

• The document is distributed by BNPP in the UK, France, and Germany under specific regulatory conditions.
• It is not available to all jurisdictions or to certain categories of investors.
• BNPP Securities Corp. (BNPPSC) is responsible for distribution to US persons.