Download PDF: I) Turkey: Back to Coma Again? Various indicators were still flashing red even before President Erdogan fired Naci Agbal – the central bank governor he appointed just four months ago – for pursuing a hawkish monetary policy. Although his firing of Mr. Agbal is akin to shooting himself in the foot and undermineContinue reading “Turkey and EM Policy Normalization”
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On Brazil and Turkey
Download PDF: Stay Positive on Brazilian Assets The backdrop for Brazilian assets remains bullish amid rising commodity prices and undervalued Real (Chart 1). In addition, Brazilian economy has recovered strongly and various indicators – such as manufacturing PMI and retail sales – are now back to pre-pandemic level (Chart 2). With the global economy continueContinue reading “On Brazil and Turkey”
February 2021: EM Bonds, Brazil and Turkey
Download PDF: 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 modest fiscalContinue reading “February 2021: EM Bonds, Brazil and Turkey”
January 2021: Silver and Equity Strategy Review
Download PDF: Part I: Silver Last week seen silver prices dropped remarkably amid rising long-term bond yield and receding dollar weakness. We have been constructive on the precious metal and commodity complex for a while now and remain to be so in the reflationary environment. There are reasons to believe that the commodity bull marketContinue reading “January 2021: Silver and Equity Strategy Review”
2021 EM Equity High Conviction Calls
Download PDF: 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 to aContinue reading “2021 EM Equity High Conviction Calls”
Commodity Plays, Copper and Yield, Caution on U.S. Equity
Downlaod PDF: Earlier this week we published our long-term global themes, outlining the possibility of stronger inflationary pressure and the danger it poses to corporate sector. Meanwhile, we also publish our next year outlook last month, where we argue that Chinese growth will rebound strongly and liquidity will remain plenty, buoying asset prices. With ourContinue reading “Commodity Plays, Copper and Yield, Caution on U.S. Equity”
Turkey: The CBRT Strikes Back and A New Hope?
Download PDF: The Central Bank of the Republic of Turkey finally capitulated to market pressure and raised its policy rates by 200 bps last week amid a weakening lira. This is a reversal of its aggressive easing policy since the 2018 crisis, when the central bank has been under government pressure to bring its policyContinue reading “Turkey: The CBRT Strikes Back and A New Hope?”
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, accordingContinue reading “Turkey Revisited: The Good, Bad and Ugly”
Revisiting Our View on Brazil, Mexico, Turkey, and South Africa
Download PDF: 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, which isContinue reading “Revisiting Our View on Brazil, Mexico, Turkey, and South Africa”
Assessing the Risk of Banking Crisis in Turkey, Russia, Mexico and Brazil
Download PDF: Assessing EM Risk Apr20 The Framework: The starting point is to analyze on a big picture scale, which EM countries will potentially undergo a banking crisis arising from the combination of unsustainable hard-currency debt and FX collapse in the current rout. Indonesia, South Africa, Chile, Mexico and Turkey are particularly vulnerable due toContinue reading “Assessing the Risk of Banking Crisis in Turkey, Russia, Mexico and Brazil”
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