Positive on Russia, Neutral on Mexico

Download PDF: 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 last quarter,Continue reading “Positive on Russia, Neutral on Mexico”

Negative Outlook: Chile, Peru and Brazil

Download PDF: 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 the declineContinue reading “Negative Outlook: Chile, Peru and Brazil”

EM Equity Strategy in an Economic Downturn

Download PDF: The global economic boom unfolding in the past year is showing signs of moderation, with data from China – the first country to suffer and come out of the pandemic – currently signaling a contraction in manufacturing activities. It is very likely that the U.S. and Euro area will also see a decelerationContinue reading “EM Equity Strategy in an Economic Downturn”

EM Bonds Revisited

Download PDF: 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 BrazilianContinue reading “EM Bonds Revisited”

Yields Meltdown, Excess Savings and EM Policy Rate

Download PDF: Global stocks continue to experience a dichotomy in recent months amid unequal economic recovery in the developed and emerging world. With vaccination rate crossing above 50% of total population and covid-19 number goes into the rear-view mirror in the rich world, both manufacturing and service sector has rebounded strongly amid last year’s pent-upContinue reading “Yields Meltdown, Excess Savings and EM Policy Rate”

Research Note: South Africa Local Curve

Download PDF: 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 global liquidityContinue reading “Research Note: South Africa Local Curve”

$100 Oil? Crude Outlook, Russia and Saudi

Download PDF: 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’ oilContinue reading “$100 Oil? Crude Outlook, Russia and Saudi”

World Earnings and Valuation, Silver, EM Inflation

Download PDF: Developed World: Earnings and Valuation Outlook Earnings for most sector has recovered to pre-pandemic level, with health care and IT sector posting strong earnings in Q1. Growth expectations for both sectors, and materials, are strong and valuation is not demanding for the later. We believe that we are entering a structural bull marketContinue reading “World Earnings and Valuation, Silver, EM Inflation”

EM Equity Earnings and Valuation Outlook

Download PDF: EM Equity Earnings Outlook The broad EM benchmark has rallied hard in the past year and is now some 15% above the pre-pandemic level. After the fall in earnings for most EM countries – with EM benchmark’s earnings currently still 17% below January 2020 level – the market is now expecting sharp earningsContinue reading “EM Equity Earnings and Valuation Outlook”

EM Review: Chile, Brazil, Indonesia and Mexico

Download PDF: Chile The cyclical bullish case for Chilean stocks is straightforward. Chilean earnings are set to improve dramatically from the higher copper prices, which will continue to enjoy structural boost from electrification of vehicle and green energy infrastructure demand, as discussed in a previous report. Chinese imports continue to pose strong number in recentContinue reading “EM Review: Chile, Brazil, Indonesia and Mexico”