贸易战升级，新兴市场前景黯淡.pptx

June 25, 2018 11:02 AM GMT
Global EM Strategist
Rallies Should Be Faded
We move back to neutral as growth differentials widen in favour of the US and trade tensions are likely to escalate further. The pressure points are shifting as the focus moves from UST yields to growth and equity market risks, leaving AXJ FX more exposed. We see EM IG credit outperforming.
Back down again: The arguments behind our shift to bullish in mid-May have not played out and so we move back to neutral on FX and credit. Rallies should be faded, not chased. We made the switch on FX last Thursday with revisions to our currency forecasts. What changed? First, growth differentials are widening in favour of the US, which was not our base case. Meanwhile, the Fed is clear about its hiking intentions. Second, trade tensions are escalating, which was also not
our base case. We see this trend deteriorating in the short term before any deals can be made.
Focus shifts to AXJ: The EM sell-off was initially driven by US rates heading higher, affecting those with weak external positions mostly in CEEMEA and Latin America. Now, growth and equity market concerns are dominant and 10y UST yields will e lower. This leaves low-yielding Asian FX more vulnerable, in our view. Our FX risk premia model agrees and these views were reflected in our forecasts last week. Price action so far is bearing this out.
Reflecting similar themes, we shift our receiver Y NDIRS from 1y to 5y, stay received 2y SGD versus USD and buy short-dated bonds in Korea on an FX- hedged basis. So far consensus GDP forecasts for Asia have been stable, but we see risks to the downside.
Elsewhere in local rates, we see value in Russia and mend a long 2027 OFZ position. Our oil strategists see the market remaining tight following the OPEC decision last Friday. We think RUB looks cheap and seasonal negatives should moderate soon. We are long versus TRY, ZAR. We still like receiving April '19 DI in Brazil and hedge with long USDBRL
In credit,