20180710-法国巴黎银行-EM_TODAY_9页_467kb

EM Strategy Daily Summary - 10 July 2018

Core Content Overview

This document provides an overview of the Emerging Markets (EM) strategy for 10 July 2018, highlighting key market developments and strategic recommendations across various regions. It is produced by BNP Paribas and includes insights from multiple strategists, as well as legal and regulatory disclosures.

Key Market Developments

Asia

• China Inflation: June CPI was 1.9% (yoy), and PPI was 4.7% (yoy).

  • CPI slightly below consensus at 3.1%.
  • PPI inflation peaked and is expected to decline in 2H.
  • Mining and raw materials prices rose by 11.5% and 8.8% respectively.
  • The PBoC may adopt supportive fiscal policies for growth, despite concerns over structural issues and leverage.

• Philippines Trade Deficit: Widened more than expected.

  • Imports grew by 11.4%.
  • Exports declined by 3.8%, driven by demand for onshore infrastructure.

• Hong Kong: Tighter interbank liquidity remains a risk.

  • USD/HKD near the top of HKMA's trading band.
  • Upcoming IPOs could further pressure liquidity.

CEEMEA

• Hungary CPI: June CPI rose to 3.1% (yoy), below the consensus of 3.2%.
  • Seasonally adjusted core inflation at 2.4%.
  • Food and fuel prices increased by 3.1% and 15% respectively.
  • Consumer durable prices fell by 1.1%.

Turkey

• Cabinet Announcement: President Erdogan has appointed one vice president and 16 ministers.
  • Berat Albayrak appointed as Minister of Treasury and Finance.
  • Ruhsar Pekcan appointed as Minister of Trade.
  • Market reaction: USDTRY sold off to levels close to 4.75.

Strategic Recommendations

• EM FX & IR Strategy:
  • Initiated a short 3m EURCLP NDF at 772.5, targeting 734 with a stop loss at 800.
  • Recommended paying HK-US 3m1y IRS at -48bp, targeting -25bp with a stop loss at -60bp.
  • Initiated a short EURCLP NDF in Chile, based on the BNP Paribas FEER model indicating USDCLP equilibrium below 600.

Key Views

• China: Inflation is expected to rise moderately, but unlikely to reach the 3% target in 2H. PPI inflation will decline due to base effects.
• Emerging Markets FX: The risk re-pricing phase is over, suggesting potential for greater inflows.
• Copper Price: Reaches fair value for the first time in the year, with a prediction of price increase.
• USDTRY: Volatility is expected to continue due to political developments and market sentiment.

EM Strategy Contacts

Legal and Regulatory Disclosures

• This document is non-independent research and may be subject to conflicts of interest.
• It is a marketing communication and not investment research.
• It may contain "Research" as defined under MiFID II unbundling rules, and is intended for certain firms only.
• BNPP may make a market in or trade securities of the entities mentioned.
• BNPP may have financial interests in the entities mentioned.
• Information is for informational purposes only and should not be relied upon as authoritative.
• No assurance is given that any transaction will be entered into on the terms mentioned.
• All estimates and opinions are subject to change without notice.
• Performance data may be based on back-testing and is for illustrative purposes only.
• The document is confidential and may not be copied or distributed without prior consent.
• BNPP may have conflicts of interest and is not liable for any losses arising from reliance on the document.
• The document is not a prospectus and may not be offered or sold in the U.S. without registration or exemption.

Additional Information

• Online Resources:

  • BNP Paribas Global Markets Website: www.globalmarkets.bnpparibas.com
  • BNP Paribas Strategy Website

• Bloomberg:

  • Fixed Income Research: BPFR
  • Emerging Markets Research: BPFR
  • G10 Interest Rate Research: BPBS
  • Market Economics: BPEC

• Legal Notice:

  • The document is for the use of intended recipients only.
  • It is subject to legal restrictions in the U.S., UK, France, Germany, Belgium, Ireland, and Italy.