20171114-法国巴黎银行-EM_TODAY_7页_231kb

EM Strategy Daily Summary - 14 November 2017

Core Content Overview

This document provides a summary of emerging markets (EM) strategy insights and market updates for 14 November 2017. It includes key information on bond issuance, GDP data, central bank policy expectations, and investment recommendations, as well as legal and regulatory disclosures relevant to the document's use.

Key Market Updates

Turkey

• Bond Issuance: The Turkish Treasury will issue 2-year and 10-year fixed coupon bonds today. The issuance amount is relatively small, and the 10y bond yield has surged by over 150 basis points since mid-September.
• Central Bank Policy: The CBRT announced plans to hold NFD sale auctions with banks to reduce FX demand from corporates. However, the TRY closed 0.3% weaker against the USD, indicating market concerns about the central bank's reliance on unconventional policies rather than rate hikes.
• Market Expectations: The recent slowdown in TRY sell-off is attributed to a steepening of the front-end of the cross-currency curve, reflecting expectations of CBRT tightening. However, the strategy team does not expect rate hikes in the near term.
• Recommendation: The team recommends receiving the 3x6 cross-currency FRA at 13.52%, targeting 13.00%, and being long USDTRY at 3.85, targeting 3.95.

Central and Eastern Europe (CEE)

• GDP Growth: Q3 GDP growth in the CEE region remained strong, supported by positive PMI releases and a mild acceleration in inflation.
  • Hungary: GDP growth accelerated to 3.6% y/y from 3.2%.
  • Czech Republic: GDP growth surprised on the upside at 5.0% y/y, above expectations of 4.7%.
  • Poland: Economists forecast a rise in GDP growth from 4.5% to 4.7% y/y.

Latin America (Latam)

• Chile: The central bank (BCCh) is expected to keep monetary policy unchanged. Recent communication and an upward CPI surprise suggest no policy changes this year.
• Investment Recommendation: The team recommends a CLPxCAM 1s2s flattener, assuming stable policy.

Key Events and Developments

• Venezuela and PDVSA: S&P has downgraded Venezuela to selective default due to its failure to make USD 200 million in coupon payments during a 30-day grace period. Rating agencies have also lowered PDVSA's ratings to selective/default. Bondholders met in Caracas to discuss proceedings, but the meeting was inconclusive. ISDA is holding a meeting today to discuss PDVSA debt.

Strategy Contacts

Legal and Regulatory 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. It should not be relied upon as an independent investment decision.
• Confidentiality: The document is for the use of intended recipients only and may not be reproduced or distributed without prior written consent.
• Conflicts of Interest: BNP Paribas may engage in transactions inconsistent with the views expressed, either for its own account or for clients.
• Risk Disclaimer: The document contains simulated performance data and does not guarantee future results. It is not intended to provide investment, tax, or legal advice.

Additional Notes

• The document includes a disclaimer about the nature of the information provided, emphasizing that it is for informational purposes only and not a prospectus or public offering.
• The document also provides US-specific disclosures related to options and ETFs, highlighting the risks and restrictions associated with these instruments.