Amidst all the bad news some good news The outlook for Emerging Markets

Transcription

1 Amidst all the bad news some good news The outlook for Emerging Markets Lars Christensen Chief Analyst, Head of Emerging Markets Research Danske Research, Danske Bank (direct) (mobile) larch@danskebankdk Investment Research Lars Tranberg Rasmussen Analyst (direct) (mobile) laras@danskebankdk

2 Agenda Market overview Emerging Markets remain under pressure and a look at some of the more spectacular stories Macro overview The bad news: The horrific growth slowdown The good news: Inflation is coming down fast Q&A session 2

3 Market overview I: The past month has not been good Risk-adjusted FX change against EUR and USD Stock market performance % SKK HUF TRY PLN ZAR CZK IDR RON KRW ILS BRL INR PHP MXN SGD (A nnualised return divided by 1-year histo rical vo latility) EGP TWD KZT RUB UAH % CNY TWD BRL KRW MXN ZAR SKK SGD INR PHP PLN UAH HUF (Local currency) ILS RON TRY EGP RUB IDR CZK MYR

4 Market overview II: CEE FX Aug Change vs EUR since August 1, 28 Ecowin Sep Oct Nov Dec 8 CZK RON HUF PLN

5 Market overview III: CIS FX 2 15 Percent change since Jan USD / UAH Jan EUR/USD matters for RUB Mar May Jul Sep Nov Jan 8 USD vs EUR RUB vs EUR RUB vs basket RUB vs USD Mar

6 Market overview IV: Latam FX 5 Change in %, since August 1, MXN vs USD CRB spot BRL vs USD -4 Aug Sep Oct Nov Dec Jan

7 Market overview V: Emerging Asia FX 5 Change in %, since August 1, 28-1 PHP IDR KRW -35 Aug Sep Oct Nov Dec

8 Macro overview I: The horrific slowdown % y/y Industrial production Asia LATAM CIS CEE

9 Macro overview II: The horrific slowdown CEE 6 Index PMI, Euro Zone PMI, Poland % y/y GDP, Latvia Business confidence >> % y/y Index % y/y << PMI, Hungary Industrial production, Hungary >> Index Index 1 5 Business confidence, Lithuania

10 Macro overview III: The horrific slowdown: CIS 15 % y/y Industrial production, Russia, sa % y/y cma % y/y % y/y Industrial production, Ukraine

11 Macro overview IV: The horrific slowdown: No escape here either 12 % y/y % y/y Retail sales, 6M cma, Brazil Industrial Production, 6M cma Index = 1, 25 Jan Brazil, Consumer confidence % y/y Industrial production, Mexico % y/y Index Index Consumer confidence, Mexico

12 Macro overview V: The horrific slowdown: Now even Asia is suffering China Taiwan 65 Diffusion index Real export>> % y/y << New export orders, CLSA PMI Industrial production Export

13 Macro overview VI: Inflation coming down 175 % y/y Inflation 15 CIS LATAM CEE Asia Factors pushing inflation: Lower commodity prices Growth slowdown Base effects But no risk of widespread deflation Lower inflation = easier monetary policy and weaker currencies

14 Macro overview VII: Inflation coming down: CEE 225 % 3m/3m annualised 2 Latvia Lithuania 75 5 Estonia % 3m/3m annualised Inflation in Czeck Republic 75 Hungary 5 25 Poland

15 Macro overview VIII: Inflation coming down: Asian deflation? 5 3m/3m annualised Inflation in South Korea Taiwan Thailand

16 Macro overview IX: Inflation coming down: Not here yet 1 8 3m/3m annualised Inflation in Brazil Mexico

17 Macro overview X: Inflation coming down: CEE 225 % 3m/3m annualised 2 Latvia Lithuania 75 5 Estonia % 3m/3m annualised Inflation in Czeck Republic 75 Hungary 5 25 Poland

18 Q&A session

19 This report has been prepared by Danske Research, which is part of Danske Markets, a division of Danske Bank Danske Bank A/S is authorized by the Danish Financial Supervisory Authority and subject to limited regulation by the Financial Services Authority (UK) Details on the extent of our regulation by the Financial Services Authority are available from us on request The authors of this report are Lars Christensen, Chief Analyst and Lars Tranberg Rasmussen, Analyst Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high quality research based on research objectivity and independence These procedures are documented in the Danske Bank Research Policy Employees within the Danske Bank Research Departments have been instructed that any request that might impair the objectivity and independence of research shall be referred to Research Management and to the Compliance Officer Danske Bank Research departments are organised independently from and do not report toother Danske Bank business areas Research analysts are remunerated in part based on the over-all profitability of Danske Bank, which includes investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance or dept capital transactions Danske Bank research reports are prepared in accordance with the Danish Society of Investment Professionals Ethical rules and the Recommendations of the Danish and Norwegian Securities Dealers Associations Financial models and/or methodology used in this report Calculations and presentations in this report are based on standard econometric tools and methodology Documentation can be obtained from the above named authors upon request Risk warning Major risks connected with recommendations or opinions in this report, including a sensitivity analysis of relevant assumptions, are stated throughout the text First date of publication Please see the front page of this research report 19

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