20180615-法国巴黎银行-LATIN_AMERICA_STRATEGY_8页_382kb

Summary of LATIN AMERICA STRATEGY Document

Core Content

This document outlines the current strategic position and market outlook for the Argentine Peso (ARS) and related financial instruments, particularly in the context of the IMF loan and the broader Latin America market dynamics. It is produced by Banco BNP Paribas Brasil S.A. and authored by key strategists within the BNP Paribas group.

Main Views on Argentina

• Profit Taking on USDARS NDF Position: The firm is taking an 8.6% profit on its long 1-month USDARS NDF position at 28.40, with a maturity date of 12 July.
• Bearish Outlook on ARS: Despite the recent depreciation, the firm remains bearish on the ARS, believing it has potential for further decline.
• Rapid Depreciation: The firm notes that the ARS has depreciated too quickly, and they are now locking in profits after having already extended their target.
• Central Bank Board Reshuffle: The firm will monitor the impact of the recent reshuffle of the central bank board on market dynamics.
• Capital Flight Concerns: There is a need for a shift in the trend of increasing capital flight, with local dynamics playing a critical role in any successful economic program.
• IMF Loan Opportunity: The firm sees a golden opportunity for Argentina to start from scratch with the current IMF loan, suggesting three potential strategies:
  • Let the ARS float freely to adjust to more sustainable levels.
  • Liquefy USD-denominated liabilities to improve solvency ratios, such as reserves/M2.
  • Use IMF dollars to buy back cheap ARS debt (including Lebacs) and non-transferable debt in the central bank’s balance sheet.

Key Strategies and Recommendations

• Short ARS Position: The firm recommends going short on the ARS, as the IMF loan is unlikely to prevent further depreciation.
• Market Dynamics Monitoring: The firm will continue to assess the market, especially in light of central bank changes and local economic factors.

Legal and Regulatory Information

• Non-Independent Research: The document is classified as non-independent research under MiFID II, and is intended for professional clients and eligible counterparties.
• Confidentiality: The information is provided on a strictly confidential basis and may not be copied or distributed without prior written consent.
• No Investment Advice: BNPP does not offer investment, financial, legal, or tax advice and does not assume any fiduciary duty.
• Risk Disclaimer: The document includes significant risk warnings, noting that the information may not be suitable for all investors and that transactions may involve high risk and volatility.
• Performance Data: Performance data included in the document may be based on back-testing and is for illustrative purposes only. It does not guarantee future results.
• Conflicts of Interest: BNPP may have financial interests in the securities discussed and may engage in transactions inconsistent with the views expressed in the document.

Distribution and Jurisdictional Notes

• United States: The document is distributed only to qualified institutional buyers or non-U.S. persons, and certain securities may not be registered under U.S. law.
• UK: The document is communicated by BNPP London Branch, which is authorized and supervised by the ECB, ACPR, and FCA.
• France: The report is distributed by BNPP SA and BNPP Arbitrage, both authorized and supervised by the ECB and ACPR.
• Germany: Distributed by BNPP Niederlassung Deutschland, a branch of BNPP SA, under ECB and ACPR supervision.
• Belgium: Distributed by BNPP Fortis SA/NV, authorized by ECB and National Bank of Belgium.
• Ireland: Distributed by BNPP S.A., Dublin Branch, under ECB and ACPR supervision.
• Italy: Distributed by BNPP Succursale Italia, under ECB and ACPR supervision, and subject to limited regulation by Bank of Italy and CONSOB.
• Netherlands: Distributed by BNPP Fortis SA/NV, Netherlands Branch, under ECB, National Bank of Belgium, and AFM supervision.
• Portugal: Distributed by BNPP Sucursal em Portugal, under ECB, ACPR, and Banco de Portugal supervision.
• Spain: Distributed by BNPP S.A., S.E., under ECB and ACPR supervision, and subject to limited regulation by the Bank of Spain.
• Switzerland: Intended solely for "Qualified Investors" as defined by Swiss law, and not for retail investors.

Important Notes

• The document is a marketing communication and not investment research.
• Indicative prices and terms are provided for informational purposes and may not reflect actual transaction terms.
• BNPP may have acted on the information before publication and may face conflicts of interest.
• All information is subject to change and should not be relied upon as authoritative.

Conclusion

The strategy focuses on capitalizing on the depreciation of the ARS, while also suggesting potential reforms to improve Argentina's economic stability. The firm is taking profit on its long USDARS NDF position and recommends a short position due to continued bearish sentiment. The document also highlights the importance of monitoring central bank dynamics and local economic indicators as the country seeks to implement a sustainable economic program.