高盛-新兴市场-投资策略-拉美：我们看好的2018年下半年可以入场的地区-20180803-25页_1mb

EM Strategy Views Summary

Core Content

This report provides an analysis of Emerging Markets (EM) strategy with a focus on Latin America as a preferred region for investment in the second half of 2018. It outlines the macroeconomic environment, valuation trends, and regional performance dynamics within EM.

Main Points

• EM Outlook: Emerging Markets are not fully recovered from the first half of 2018 sell-off, but there is an "upside interest" in EM assets, particularly in Latin America.
• Market Stability: The stability of EM markets in July, especially outside of China, has improved sentiment, which has shifted from a negative tone in the Spring to a more positive one.
• Regional Differentiation: EM assets trade with a common risk factor, but regional differentiation is becoming more pronounced. Latin America has de-rated the most in equities and local interest rate curves have steepened the most.
• Performance Rotation: There has been a clear rotation from Asia to Latin America in terms of cross-asset performance, as seen in the EM cross-asset performance indices.
• Valuation Trends: Latin American equities and fixed income have de-rated significantly, and are now at levels that are in line with the post-GFC average, which suggests value.
• EPS Recovery: Latin America has shown a recovery in earnings per share (EPS) in July, unlike Asia and CEEMEA, which have seen negative revisions.
• FX Impact: FX has played a significant role in the performance of Brazil and Mexico, with both currencies showing similar movements since early 2017.
• Interest Rates: The local interest rate curves in Brazil and Mexico have steepened more than in other EMs, indicating potential for further yield declines relative to credit spreads.
• Investment Preference: The report favors local currency bonds over credit in Brazil and Mexico due to the widening local rate premium.
• Regional Clusters: There are clear regional clusters in EM performance, with Latin America and Asia showing different trends compared to CEEMEA.
• Macro Forecasts: The report includes macro forecasts for major EMs, showing expected GDP growth, inflation, and policy rates for 2017, 2018, and 2019.
• Activity Indicators: Current activity indicators across EMs show varying levels of economic activity and financial conditions.
• Policy and Inflation: The report outlines the current inflation levels and policy rate trends across EMs, highlighting the impact of recent policy changes on market conditions.

Key Information

• Valuation: Latin American equities have de-rated significantly, aligning with post-GFC averages, while Asian and CEEMEA equities remain above these averages.
• Earnings: Latin America has shown a positive EPS revision in July, unlike Asia and CEEMEA, which have seen negative revisions.
• FX Correlation: FX movements are correlated with local equity and interest rate performance in Brazil and Mexico, with similar trends since 2017.
• Interest Rates: Local interest rate curves in Brazil and Mexico have steepened more than in other EMs, indicating potential for yield declines.
• Credit Spreads: Credit spreads in Brazil and Mexico have tightened, contributing to a widening local rate premium.
• Growth Expectations: Brazil and Mexico are expected to show near-term outperformance, with Brazil having more limited room for growth compared to Mexico.
• Macro Drivers: The report highlights the role of macroeconomic factors such as commodity prices and the dollar in shaping EM performance.

Regional Affinity and Differentiation

• Cross-Asset Correlation: There is a strong regional affinity in EM assets, with Latin America showing a clear cluster.
• Correlation Matrix: The correlation matrix shows that Brazil and Mexico are more similar to each other than to other EMs, indicating a potential for synchronized performance.
• Policy Rates: Policy rates across EMs vary, but there is a common trend of easing in some markets, such as China, which has improved sentiment.

Investment Strategy

• Tactical Preference: Latin America is favored over Asia in the short term, with Brazil and Mexico being highlighted for their local exposure value.
• Asset Allocation: The report suggests a preference for local currency bonds over credit in Brazil and Mexico, due to the local rate premium.
• Risk Considerations: Political risks remain a concern in both Brazil and Mexico, but the report believes that the directional trajectory of their currencies and assets is positive.

Conclusion

The report concludes that Latin America is a strategic region to "step into" for the second half of 2018, driven by improved sentiment, de-rated valuations, and positive EPS revisions. While EM as a whole is not out of the woods, there are clear lines of differentiation that suggest Latin America is a regional outperformer. The report highlights the importance of regional analysis and the potential for local currency exposure in Brazil and Mexico.