20180125-法国巴黎银行-EM_TODAY_10页_339kb

EM STRATEGY DAILY SUMMARY - 25 January 2018

Core Content Overview

This document provides an analysis and outlook for Emerging Markets (EM) currencies and assets, focusing on key events and market movements across Europe, Asia, and Latin America. It includes insights on monetary policy, economic data, and political developments that may influence FX and interest rate markets.

Key Market Focus

Europe (CEEMEA Region)

• ECB Policy Outlook: The ECB is expected to maintain a dovish tone during its policy meeting, which may provide relief to the short end of the yield curve and support euro-funded EM currencies.
• Poland (PLN): Positive forward returns on PLN vs. EUR indicate a firm positive bias, increasing the likelihood of a break in EURPLN below 4.15.
• Chart 1: Highlights the positive realized forward returns in PLN over various time horizons, suggesting a favorable outlook for the Polish zloty against the euro.

Asia

• Malaysia (BNM): The Bank Negara Malaysia raised its policy rate by 25bps to 3.25%, as inflation remains in the upper band of the target range.
• South Korea: GDP data was in line with potential, but the KRW's strength and tighter monetary conditions are likely to weigh on growth. The market's expectation of two more rate hikes over the next 12 months is considered overdone. A recommendation of a 1y1y Korea NDIRS at 2.20% is made.
• Chart 2: Indicates that rate hike expectations for Korea are overdone, with a significant gap between market and fair value models.

Latin America (Latam)

• Brazil (BRL): The Appeals court upheld Lula's corruption conviction, making it difficult for him to run for president. This could lead to further improvement in FX and rates. The recommendation remains to be long BRL, and DIs will be closed today due to a local holiday in Sao Paulo.
• Mexico: The bi-weekly CPI was below expectations, pushing nominal rates down. Real rates underperformed. The team remains long Jun/19 UDIBonus due to the belief that short-term inflation linkers are oversold.

Political and Economic Developments

• Brazil: The conviction of former President Lula is a significant political event, which may affect the country's political and economic outlook.
• South Africa: The government is restructuring Eskom and not providing fresh aid, indicating a focus on management changes. CPI data showed a slowdown, supporting the possibility of a more dovish SARB stance in the coming months.
• Turkey: Border issues in North Syria are a focus, with conflicting statements from US and Turkish officials. Elections in Turkey may keep these issues in the spotlight.

Strategy Recommendations

• Poland (PLN): Remain long PLN due to positive forward returns and potential support from ECB's dovish stance.
• Brazil (BRL): Continue to be long BRL and receive DI Jan20sJan21s FRA.
• Mexico: Maintain a long position on Jun/19 UDIBonus due to the oversold nature of short-term inflation linkers.
• South Korea: Recommend a 1y1y Korea NDIRS at 2.20%, as the market is overestimating rate hike expectations.

Contacts

Emerging Markets Strategy Team

Production Team

Legal Disclaimer

• This document is non-independent research and may be subject to conflicts of interest.
• It is a marketing communication and not investment research.
• The document is intended for Professional Clients and Eligible Counterparties.
• The information is based on public sources and is not guaranteed to be accurate or complete.
• BNPP may make a market in the discussed securities or derivatives and may have financial interests in the issuers.
• No liability is accepted for any direct or consequential loss arising from the use of this document.
• The document may contain back-tested performance data and is not a prospectus or public offering.
• It is not intended to provide investment, tax, or legal advice.
• ETFs and other securities discussed may not be registered under US securities laws and may be restricted securities.

United States Disclosures

• Options discussed are complex and not suitable for all investors.
• ETFs have risks including tracking error, currency, and geopolitical risks.
• BNPP may have conflicts of interest due to its involvement with ETFs or related companies.
• Certain securities may not be registered under the US Securities Act and are restricted.

Online Resources

• BNP Paribas Global Markets Website: www.globalmarkets.bnpparibas.com
• BNP Paribas Strategy Website: [BNP Paribas Strategy Website](BNP Paribas Strategy Website) (link not provided)

Final Notes

• The document is for information purposes only and may be subject to change.
• All estimates and opinions are as of the date of the document and may not be updated.
• Transactions are subject to the terms agreed upon by the parties involved.