J.P. 摩根-新兴市场-宏观策略-2019IMF与世界银行春季会议亮点-2019.6.4-34页.pdf

Global Emerging Markets Research04 June 2019 Highlights from the 2019 IMF/World Bank Spring MeetingsReluctantly bullish:Clear EM risk appetite despite lack of compelling opportunitiesChair of Global ResearchJoyce Chang(1-212)834-J.P.Morgan Securities LLCGlobal Emerging Markets ResearchLuis Oganes AC(1-212)834-J.P.Morgan Securities LLCJahangir Aziz AC(1-212)834-J.P.Morgan Securities LLCJonny Goulden AC(44-20)7134-J.P.Morgan Securities plcSee page 32 for analyst certification and important More than 750 investors attended our investor seminar during the International Monetary Fund and World Bank Spring Meetings in Washington DC on April 11-12,which featured meetings with DM and EM policy makers,official creditors and independent analysts.Key highlights from the meetings follow:Fed pivot has helped long EM positions and inflows,with investorspositioned OW but seeing limited opportunities.Speakers had no clear ideas on how to raise DM inflation in an orderly way.EM central banks have room to keep easy monetary stances and we project policy rates 44bp lower on average.China is showing early signs of growth stabilization and a positive announcement on US-China trade appears forthcoming soon.However,there were serious questions about the comprehensiveness and durability of a deal,considering the US insistence on a unilateral enforcement mechanism.Investors are willing to hold onto Argentina risk despite the political uncertainty.While the election calendar will likely keep volatility high through the year,depressed valuations keep investors willing to hold positions,as few see an eventual Cristina Kirchner win.While the devil is in the details,Brazil remains the preferred EM macro story for investors this year despite concerns about outlook for the pension reform.Investors believe that pension reform will gain approval and Brazilian authorities outlined their plan to tackle fiscal and growth challenges in otherareas:privatizations,containment of public payroll growth and trade opening.Significant concerns remain over how politics in Mexico will impact policies and institutions.Investors expect USMCA to be approved by the US Congress in 2H19 despite few signs of momentum at present,but concerns remain that AMLOs policies could lead to institutional deterioration,ratings downgrades,and risk capital outflows.Further sanctions against Russia likely to be announced soon.The next round of chemical weapons related sanctions could be imminent and Congress appears more likely to pass sanctions post Mueller,with sovereign debt and secondary market trading more frequently mentioned in the discussions.Turkey remains an ongoing source of concern to investors as seen in our audience survey and recent market volatility.In our client survey,44%ofinvestors feared that forthcoming policy actions will fall short of what is needed to address intensifying debt rollover pressures,and 39%asserted that macroeconomic policies can only provide temporary support if not accompanied by the rebuilding of state capacity and institutions.Venezuelas interim authorities remain confident on regime change.They indicated that a future debt restructuring would seek to minimize holdouts and expedite a return to capital markets,but would require an“important”haircut.Paradigm shifts are underway with key policy risks facing a redefinition away from the traditional macro cyclical forces.They include populism,climate change and cybersecurity risks.Among frontier markets,Ecuador was seen as making the most progress compared to a year ago.Concerns are increasing about the outlook for Sub-Saharan Africa,particularly given the strong YTD performance(+12%).This version supersedes the document published on April 17,2019.Please see page 32 for details.2Global Emerging Markets ResearchHighlights from the 2019 IMF/World Bank Spring Meetings04 June 2019Luis Oganes(1-212)834- This report summarizes the main messages from the presentations in the J.P.Morgan investor seminar at the time of the 2019 International Monetary Fund and World Bank Spring Meetings in Washington DC on April 11-12,which included multilateral and government officials,monetary authorities,rating agencies,market participants,and economic and political consultants.As such,they represent the perspectives of the speakers and not necessarily the opinions of J.P.Morgan research analysts.All sessions from the conference were conducted under Chatham House rules,without direct attribution to the speakers and closed to the press.ContributorsClick here to enter text.Lara Bes AC(1-212)834-3947LJ.P.Morgan Securities LLCGabriel LozanoAC(52-55)5540-Banco J.P.Morgan,S.A.,Institucin de Banca Mltiple,J.P.Morgan Grupo FinancieroCarlos CarranzaAC(1-212)834-J.P.Morgan Securities LLCKatherine MarneyAC(1-212)834-J.P.Morgan Securities LLCCassiana FernandezAC(55-11)4950-Banco J.P.Morgan S.A.Trang NguyenAC(1-212)834-J.P.Morgan Securities LLCRobert HabibAC(1-212)834-J.P.Morgan Securities LLCSteven PalacioAC(52-55)5382-Banco J.P.Morgan,S.A.,Institucin de Banca Mltiple,J.P.Morgan Grupo FinancieroMichael Harrison AC(1-212)834-J.P.Morgan Securities LLCDiego W.PereiraAC(1-212)834-J.P.Morgan Securities LLCAmy HoAC(1-212)622 J.P.Morgan Securities LLCBen RamseyAC(1-212)834-J.P.Morgan Securities LLC3Global Emerging Markets ResearchHighlights from the 2019 IMF/World Bank Spring Meetings04 June 2019Luis Oganes(1-212)834- Table of ContentsTop 10 Takeaways.4Results of the On-site Audience Survey.8Speaker Perspectives on Global Issues.14International Monetary Fund:World Economic Outlook.14Global Financial Stability:Dovish Fed provides near-term boost,but vulnerabilities underlie medium-term concerns.14Assessing the state of US-Russia relations.15Speaker Perspectives on Developed Markets.16US domestic political dynamics and US foreign policy priorities ahead of 2020 elections.16US Treasury macro views and policy priorities.17Big Data insights:Institutional investor reactions to major market events and small business sector highlights.17Euro Area:Outlook and available policy tools.18European outlook:Challenges abound.19Speaker Perspectives on Emerging Markets.19The sovereign restructuring outlook has Venezuela as a tough nut to crack.19EM credit ratings outlook:Ratings overall are broadly stable but keep watch on SSA.20Speaker Perspectives on EM Asia.22Chinas economy is stabilizing,but medium-term outlook points to further deceleration.22India:Pivotal politics ahead.23Speaker Perspectives on EMEA EM.24Central and Eastern Europe:Monetary policy outlook.24Turkey:Dealing with economic rebalancing amid slower growth.24Speaker Perspectives on Latin America.25Economic and political outlook for Latin America.25Argentina:Its about policy continuity.26Brazil:Economic outlook.27Chile:BCCh on hold for(at least)a few quarters.27Colombia:A strong story with a twin deficit pitfall.28Ecuador:Addressing entrenched structural challenges.28Mexico:Building bridges with the private sector amid fiscal challenges.29Peru:A data-dependent BCRP.30Uruguay:The fiscal challenge to be addressed by the coming administration.30Venezuela:Planning for a still pending regime change.314Global Emerging Markets ResearchHighlights from the 2019 IMF/World Bank Spring Meetings04 June 2019Luis Oganes(1-212)834- Top 10 Takeaways We hosted 25 meetings for around 750 macro,EM dedicated and crossover investors with DM and EM policymakers,official creditors and independent analysts at the Spring IMF/World Bank Annual Meetings in Washington,DC on April 11-12.The top 10 takeaways from the meetings follow:1.Fed pivot has helped long EM positions and inflows,with investors positioned OW but seeing limited opportunities.The Fed pause appears to have become the baseline view,with 41%expecting the Fed to stay on hold in 2019 but forced to cut in 2020,and 24%seeing an on-hold stance through 2020;only 9%envisioned a flare-up in inflation causing the Fed to resume hiking.The end-2019 10-year UST yield was seen at 2.5-2.75%by 39%of investors,and 37%saw 2.25-2.50%,compared to the J.P.Morgan forecast of 2.75%.None of the speakers had clear ideas on how to get DM inflation up in an orderly way.We believe that EM policymakers have room to maintain easy monetary policy stances and are now projecting policy rates 44bp lower on average.The biggest beneficiaries have been the high-yielders such as Brazil,which is now expected to remain on hold in 2019a 225bp shift from the projected rate hike in December 2018and India,where we expect another 25bp rate cut in addition to the 50bp cuts already delivered this yearwhich tantamount to a 125bp reversal from the 50bp of rate hikes projected in 2019 at the end of last year.Overall,the risk of rate changes is tilted to more reductions as growth and inflation remain subdued.2.China is showing early signs of growth stabilization and a positive announcement on US-China trade appears to be forthcoming soon.The stabilization in the data flow and the significant policy support,including a VAT cut effective on April 1 and a social security contribution rate cut effective on May 1(in addition to the already substantial reductions in personal income tax that were implemented on January 1),suggest that China should be able to deliver growth in the 6-6.5%range.In recent weeks both official and private projections for growth in 2019 have been marked up.However,the policy support comes at a cost with credit ratios likely to rise over the course of the year by as much as 4-5%-pts of GDP,raising concerns as high debt remains Chinas key vulnerability.Over the medium term,Chinas growth is likely to slow to a 4%handle.However,in the absence of restructuring of the SOE sector,even the lower growth rate would require a continued increase in leverage and a move towards ZIRP to keep debt service under control.This runs the inevitable risk of inducing capital outflows and increasing external vulnerabilities.While there was wide agreement that a US-China trade deal is forthcoming,there were serious questions about both the comprehensiveness and the durability of such a deal.Given that the outstanding areas of disagreement are very problematic,it is unlikely that these will get satisfactorily resolved in this trade deal.Moreover,with US insistence on a unilateral enforcement mechanism,an agreement may not last long with equal probability that either side could renege.While it is in Chinas immediate benefit to keep the bilateral exchange rate stable,doing so over any length of time would necessarily erode the monetary policy independence that the basket peg has provided.Moreover,PBOCs recent successes in improving the monetary mechanism by shifting to using money market rates as policy instruments would also be lost.5Global Emerging Markets ResearchHighlights from the 2019 IMF/World Bank Spring Meetings04 June 2019Luis Oganes(1-212)834- 3.Investors are willing to hold onto Argentina risk despite the political uncertainty.Brazil and Argentina topped the rankings for best performer in 2019,though not by a large margin(22%and 21%,respectively).Other large EM countries(China,Mexico,Russia,Turkey,South Africa,India)garnered between 6-15%apiece,while audience expectations of the worst performing country was overwhelming led by Turkey(48%),followed by South Africa(11%)and Argentina(10%).Around 40%foresee a Macri win in Argentinas upcoming elections in October,while around one-quarter(26%)expect a moderate Peronist(Massa or Lavagna)to win,and 9%expect a Cristina Kirchner or another Kirchnerista victory.While the election calendar will likely keep volatility high through the year,depressed valuations keep investors willing to hold positions,as few see aneventual Cristina Kirchner win.For the November run off a close race between the incumbent(Macri)and populism(Kirchner)still is the most likely scenario,with Macri winning by a couple of points.The authorities reinforced the commitment to comply with the IMF program,but acknowledged the primary fiscal deficit may end the year at-0.5%of GDP and not 0%as outlined in the fiscal space embedded in the program.But the fiscal authorities transmitted a commitment to continue fiscal consolidation at about 2.2%-pt of GDP despite the election year,and the monetary authorities expressed that potential dollarization amid political uncertainty should be contained and its effect on the exchange rate limited amid the Treasury USD sales of US$9.6bn.Authorities also denied the possibility of price controls as a strategy to tame inflation.Our researchers believe that the likelihood of policy continuity is linked in the near term to a well-behaved FX,and relatedly inflation easing in May.J.P.Morgan believes that the peso could stabilize in the near term,on improved valuations,USD supply from the Treasury,agricultural export inflows,and improving current account balance dynamics,but the technical position in credit will likely remain an issue.4.While the devil is in the details,Brazil remains the preferred macro story for investors in the EM space this year despite concerns about the outlook for the pension reform.Investors are assuming that the pension reform will gain approval with 73%indicating that it will pass in 2H19 and only 4%hold a more optimistic 1H19 expectation,while the remaining 24%do not envisage a 2019 passage citing a new version to be presented in 2020.Brazilian authorities outlined their plan to tackle fiscal and growth challenges in four different areas:social security reform(a broad and bold bill has been submitted to Congress,targeting BRL1.1trn of fiscal savings over 10 years);privatizations(target was to raise US$20bn this year,with US$12bn completed and around US$200bn projected over four years);contain public payroll growth(freeze new hiring);cut the red tape(deregulation,tax simplification etc.);and trade opening(gradual decrease of import tariffs).Additionally,the independence of the Central Bank was emphasized with a new bill submitted to Congress,and commitment to a true floating FX regime aligned with BCB governors recent messages.While the agenda and the presentation of Brazilian authorities were well-received,doubts remain about the execution of the plan and the governments ability to move the agenda forward in Congress,especially without a more explicit engagement of President Bolsonaro.6Global Emerging Markets ResearchHighlights from the 2019 IMF/World Bank Spring Meetings04 June 2019Luis Oganes(1-212)834- 5.Significant concerns remain over how politics in Mexico will impact policies in the near term and institutions over the medium term.The authorities sent a message that they have come to terms with the fact that it is necessary to build investor confidence after an initial period of“mixed messages by the administration.”They plan to do so by communicating a clear medium-term fiscal outlook,boost public-private partnerships,and resort to concessions of public assets to the public sector.However,uncertaintyremains with regard to domesti