Download PDF: peru-researchDownload For long investors have regarded Chile and Peru as one of the more stable Latam countries, as reflected in these countries’ borrowing cost and disciplined management of fiscal and monetary policy. Late last year, however, Peru went through a political crisis over the impeachment of former President Vizcarra by the Congress overContinueContinue reading “Peru: Latin America’s Growth Star”
Tag Archives: macro
February 2021: EM Bonds, Brazil and Turkey
Download PDF: monthly_202002Download EM local-currency bonds EM bonds still have room for spread tightening against U.S. Treasury. The 10-year Treasury yield will have difficulty to break 1.2% level as the Fed is unlikely to raise rate until inflation overshoot its 2% target, creating an anchor for yields globally to remain low. Moreover, the relatively modestContinueContinue reading “February 2021: EM Bonds, Brazil and Turkey”
2021 EM Equity High Conviction Calls
Download PDF: 2021_em_equity_callsDownload Poland Polish manufacturing sector and exports have both staged a V-shaped recovery despite the reintroduction of a strict lockdown across major European countries (Chart 1). As an open economy that is highly integrated with European manufacturing sector Poland has benefited from the sharp recovery of German manufacturing (Chart 2-4), which points toContinueContinue reading “2021 EM Equity High Conviction Calls”
Global Themes 2021-2030
Download PDF: global_themes_2021_2030-pcDownload Last month, we outlined our outlook for the year ahead, where Chinese growth will continue to rebound strongly and global liquidity remain plenty. This month, we are taking six themes for the coming decade, with the focus on inflation, savings-investment dynamic, and transition to renewable energy. I hope you enjoy the read.ContinueContinue reading “Global Themes 2021-2030”
Global Themes 2021: China, U.S., and Emerging Markets
Download PDF: monthly_202011Download This year, the coronavirus and lockdown restriction enforced globally have driven the financial market at large, far outweighing the impacts from U.S.-China escalating geopolitical rivalry, war in the Caucasus, and U.S. Presidential Election. These themes are likely to continue in 2021 and already some of its effects lingered permanently, as discussed below.ContinueContinue reading “Global Themes 2021: China, U.S., and Emerging Markets”
South Africa: Is The Worst Yet To Come?
Download PDF: south_africa_202010Download South African government fiscal situation turned from bad to worse this year amid a shortfall in tax revenue and increase in spending to support growth (Chart 1). The government’s revision to its budget in June mainly reflects a shifting of its spending, i.e. delaying projects to 2021/2022 or beyond while prioritizing fundsContinueContinue reading “South Africa: Is The Worst Yet To Come?”
Turkey Revisited: The Good, Bad and Ugly
For the past several quarters, we have maintained a constructive view on Turkish assets, particularly on the country’s equity and currency, as valuations are already significantly depressed even before the COVID-19 rout. Percentile of equity multiples for Turkish equity is near its two decades low and the Turkish Lira is more than 20% undervalued, accordingContinueContinue reading “Turkey Revisited: The Good, Bad and Ugly”
Revisiting Our View on Brazil, Mexico, Turkey, and South Africa
Download PDF: revisiting-latam-and-emea-countriesDownload Brazil: Negative Outlook Valuation is dearer than the average EM countries, although the rout has knocked out excessive valuation for Brazilian stocks. Book value multiple has indeed declined from 2.3x to 1.8x currently, but weak profitability due to depressed commodity prices has translated into an expensive forward earnings multiple at 14x, whichContinueContinue reading “Revisiting Our View on Brazil, Mexico, Turkey, and South Africa”
Russia: Do You Hear the People Sing?
Download PDF: russia-do-you-hear-the-people-singDownload In the past few weeks, Russians have been venting their rage in both the street and online due to the increasing hardship resulting from various lockdown measures. But even before the virus struck, many have been protesting against the government, including against the planned constitutional reform that would extend President Putin termContinueContinue reading “Russia: Do You Hear the People Sing?”
LATAM Countries Revisited
Download PDF: LATAM Countries Revisited PC Argentina The Fernandez government is taking a hard stance on the debt renegotiation, postponing interest payment until 2023 and forcing a 5-12% haircut on the bond principal value. The “Globales” bond’s principal under restructuring amounts to 6.7% GDP and its annual interest expense close to 0.4% GDP. The keyContinueContinue reading “LATAM Countries Revisited”
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