Download PDF: The news related to Evergrande default last month has reignite investors attention to the country real estate sector, which is a major driver of Chinese growth and strongly intertwined to the country’s banking sector. Moreover, property accounts for 70% of household wealth – a significantly higher portion compared to U.S. and Japan atContinue reading “China: Implications from Real Estate Crackdown and Growth Outlook”
Tag Archives: investment
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”
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% fromContinue 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, theContinue reading “USDBRL – Better Entry Point Ahead”
Central and Eastern European Countries: Rising Rates Will Lift All Boats
Download PDF: 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 and EasternContinue 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: 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 South AfricanContinue reading “South Africa: The Not So Good, The Bad, and The Ugly”
Brazil: Fiscal Crisis in the Making?
Download PDF: 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 downside riskContinue reading “Brazil: Fiscal Crisis in the Making?”
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”
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