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EM STRATEGY DAILY - 18 July 2018 Summary

Core Content Overview

This document provides an update on Emerging Markets (EM) strategy and market outlook from BNP Paribas for the date of 18 July 2018. It includes insights on key economic indicators, currency valuations, and central bank actions in several EM countries, as well as contact information for EM strategy teams and legal disclosures.

Key Market Insights

Indonesia

• Policy Meeting: Bank Indonesia is set to hold a policy meeting on the following day.
• Rate Hike Possibility: The IDR remains undervalued compared to the CLEER™ model. A rate hike is not ruled out to maintain IDR strength.
• Recent Action: In the last meeting on 29 June, they raised key policy rates by 50 basis points to defend the currency.

South Africa

• CPI Data: The June CPI data will be released today, with expectations of a rise to 4.8% y/y, following a slowdown to 4.4% in May.
• Inflation Drivers: Higher fuel prices are expected to be the main driver of inflation acceleration.
• Forecasts Revisions: Core CPI forecasts for 2018 and 2019 have been revised up by 0.1pp and 0.2pp respectively.
• FX Outlook: The ZAR is under caution due to potential capital flight and high foreign positioning.

Turkey

• Current Account Deficit: There is an expectation of improvement in the current account deficit in the coming months.
• Positive Factors: Low domestic demand, strong exports, and tourism revenues are expected to help.
• Gold Imports: A possible decrease in gold imports may further support the currency.
• Investor Sentiment: The positive impact on investor sentiment is noted as currency pressure could ease.

Strategy Team Contacts

Production and Editorial Team

Legal Disclosures

• Non-Independent Research: This document is non-independent research and may be subject to conflicts of interest.
• Marketing Communication: It is a marketing communication and not investment research.
• Confidentiality: The document is confidential and may not be distributed without prior written consent.
• Liability Disclaimer: BNPP disclaims all liability for any direct or consequential loss arising from the use of the document.
• Performance Data: Performance data may be based on back-testing and is for illustrative purposes only.
• Regulatory Compliance: The document is subject to various regulatory requirements and is intended for professional clients and eligible counterparties.

Online Resources

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

US Disclosures

• Options: Options are complex and may involve a high degree of risk.
• ETFs: ETFs have associated risks, including tracking error and market exposure.
• Convertibles Securities: Certain securities may not be registered under US law and are restricted.

Regulatory Information

• UK: This document is communicated by BNP Paribas London Branch, authorized by ECB, ACPR, and Prudential Regulation Authority.
• France: The report is produced and distributed by BNPP SA and BNPP Arbitrage, authorized by ECB and ACPR.
• Germany: Distributed by BNPP S.A. Niederlassung Deutschland, authorized by ECB and ACPR.
• Belgium: Distributed by BNPP Fortis SA/NV, authorized by ECB and National Bank of Belgium.
• Ireland: Distributed by BNPP S.A., Dublin Branch, regulated by ECB and ACPR.
• Italy: Distributed by BNPP Italian Branch, authorized by ECB and ACPR, and regulated by Bank of Italy and CONSOB.