Download PDF: russia-and-mexico-2021q4-pcDownload Remains Overweight Russia Russia and other oil-exporting countries historically perform poorly during a global slowdown, but tighter discipline among OPEC+ and shale producers since last year has bolstered oil prices to above $80/bbl, which creates a positive spin for energy producers. We have been constructive on Russian and energy sector since lastContinueContinue reading “Positive on Russia, Neutral on Mexico”
Category Archives: Research
Negative Outlook: Chile, Peru and Brazil
Download PDF: brazil-chile-and-peru-2021q4-pcDownload Downgrade Chile and Peru to Underweight Our recommendation to trim exposure to Chile and Peru is driven by three things: downside risk in copper price, rising political risk, and aggressive tightening by both countries’ central bank. Slowdown in Chinese growth is going to weigh on commodity intensive Latam bourse heavily through theContinueContinue reading “Negative Outlook: Chile, Peru and Brazil”
Chinese and Asian High Yield Corporate Bonds: Feeling the Heat
The jitter surrounding Evergrande’s solvency problem has spread to other Chinese property developers that account for sizeable portion of Chinese and Asian High Yield Corporate index. Chart 1 and 2 show spreads of Chinese and Asian USD bonds have widened to 16% and 11.5%, respectively, while the total return index declined 18% and 12% fromContinueContinue reading “Chinese and Asian High Yield Corporate Bonds: Feeling the Heat”
USDBRL – Better Entry Point Ahead
We are currently cautious on the BRL. Although valuation is cheap, deceleration in global growth and rising downside risk for global equities and commodities mean there will be a better entry point to short USD/BRL. Shorting EUR/BRL is a more attractive trade given the risk of a stronger dollar in such macro environment. First, theContinueContinue reading “USDBRL – Better Entry Point Ahead”
Central and Eastern European Countries: Rising Rates Will Lift All Boats
Download PDF: central-and-eastern-european-countries-202109-pcDownload Central banks in Czech and Hungary have begun to raise their policy rate this year amid acceleration in inflation as their domestic recovery unfolds, creating a tailwind for the koruna and forint against the Euro, which will not see the ECB raising its borrowing cost anytime soon (Chart 1). With Central andContinueContinue reading “Central and Eastern European Countries: Rising Rates Will Lift All Boats”
South Africa: The Not So Good, The Bad, and The Ugly
Download PDF: south-africa-pc-202109Download Last November we discussed the cyclically bullish but bleaker longer-term outlook for South African assets, in which the former has played out nicely until the end of second quarter this year. Our long position on South African bond was closed on August 10 with 10.2% gain while our overweight recommendation on SouthContinueContinue reading “South Africa: The Not So Good, The Bad, and The Ugly”
Brazil: Fiscal Crisis in the Making?
Download PDF: brazil-pc-202109Download The Brazilian 10-year bond yield has continued to shoot up to 11% this month amid the political debacle in the country and lack of credible proposal from the government to reign its growing public debt. A hawkish Fed, deterioration in Chinese growth and flareup of the pandemic globally all point to downsideContinueContinue reading “Brazil: Fiscal Crisis in the Making?”
EM Bonds Revisited
Download PDF: em-bonds-revisited_pcDownload We remain positive on some EM local currency bonds, favoring countries with higher yields and cheaper currencies, stronger external profile, and lower interest burden. Investors should overweigh local currency bonds in Indonesia, China, Colombia and Russia, and under weigh those in India, Philippines, Malaysia, Taiwan and Chile.Valuation is cheap for both BrazilianContinueContinue reading “EM Bonds Revisited”
Research Note: South Africa Local Curve
Download PDF: south-africa-local-curve-pcDownload South African local curve will likely continue to bear flatten in the coming months as the central bank start to raise policy rate as inflationary pressure rises – in line with other EM countries. Currently we see sufficient spread of ZA 10-year bonds against global benchmark amid the backdrop of abundant globalContinueContinue reading “Research Note: South Africa Local Curve”
$100 Oil? Crude Outlook, Russia and Saudi
Download PDF: update-on-oil-russia_pcDownload Recent weeks have seen oil price keeps on climbing despite the thawing tension between U.S.-Iran relation that potentially bring additional 1.5 mb Bbl/day supply into the market. We are expecting a continued strong global recovery this year and restraint from Saudi and Russia in ramping up production, as currently the two countries’ContinueContinue reading “$100 Oil? Crude Outlook, Russia and Saudi”
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