J.P. 摩根-新兴市场-信贷策略-第十届新兴市场企业大会的主要收获-2019.3.1-40页.pdf

Global Credit Research01 March 2019 Main Takeaways from Our 10th EM Corporate ConferencePositive sentiment driven by receding macro risks and supportive stand-alone fundamentals/technicalsEmerging Markets Corporate StrategyYang-Myung Hong AC(1-212)834-J.P.Morgan Securities LLCAlisa Meyers AC(1-212)834-J.P.Morgan Securities LLCZubair K Syed AC(1-212)834-J.P.Morgan Securities LLCSoo Chong Lim AC(852)2800-J.P.Morgan Securities(Asia Pacific)LimitedZafar Nazim,CFA AC(44-20)7134-J.P.Morgan Securities plcNatalia Corfield AC(1-212)834-J.P.Morgan Securities LLCSee page 37 for analyst certification and important disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment We held our annual Global EM Corporate Conference in Miami from February 25 to February 27.This year marked the 10th edition of our flagship EM corporate conference,and the size and scope has been growing together with the asset class,which expanded from about$600bn in early 2010 to$2.2tn currently.The global scope of our asset class means that issuers from all the different EM regions participated in addition to diverse investors across EM dedicated,US,Europe,and Asia.The constructive sentiment at the conference reflected the recent positive tone in markets as well as comfort on corporate fundamentals and technicals,but with some unease at current spread levels that do not seem to reflect much downside buffer.CEMBI Broad is up 3.6%YTD,more than recovering the-1.6%loss posted in 2018.Current spread at 275bp is back to the levels of mid 2018 and at our near-term target.The view on EM corporate fundamentals remained generally favorable as 72%of survey respondents expected stable to improving trends.This was also reflected in the default expectations,where the vast majority anticipated modest default rates of below 4%.In addition,the lack of supply outside of Asia and limited net supply continue to paint a supportive picture for overall technicals.The main risk factors were still related to the main macro themes of rising UST yields/stronger USD and trade protectionism.While the dovish turn by the Fed and recent developments from the US-China trade talks seem to mitigate these risk factors,there seems to be concern that they could return to put pressure on markets down the road.This is in line with our view that current spread levels factor in limited buffer against such risk factors,with the risk-reward skewed to the downside in case they do not turn out as favorable as expected.On the other hand,accelerating growth in China and modest recovery in global growth were cited as the upside catalysts.The country-level performance expectations were once again interesting,with Brazil picked as the top CEMBI country segment in 2019 whereas Mexico was selected as the worst.However,there seems to be somewhat of a backward-looking component in these responses given that Brazil has been the best performing country segment over the past year while Mexico has been among the worst.On a regional level,most respondents chose Latin America as the region to add risk and EM Europe as the one to reduce.In this publication,we provide full results of the onsite survey and a summary of 22 panel presentations held during the conference.This report summarizes the main messages from the presentations and,as such,represents 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.The views presented by the speakers do not necessarily coincide with the views of J.P.Morgans research analysts.2Global Credit Research01 March 2019Yang-Myung Hong(1-212)834- Contributing AuthorsGlobal EM Corporate StrategyYang-Myung HongAC(1-212)834-Alisa MeyersAC(1-212)834-Zubair SyedAC(1-212)834-Asia Corporate ResearchSoo Chong LimAC(852)2800-Varun AhujaAC(852)2800-EMEA Corporate ResearchZafar NazimAC(44-20)7134-Rahul BhatAC(44-20)7134-Vishal IyerAC(44-20)7134-Latin America Corporate ResearchNatalia CorfieldAC(1-212)834-Julio ArantesAC(1-212)834-Julie MurphyAC(1-212)834-Alejandra AndradeAC(1-212)834-Global Index ResearchGregory EldersAC(1-212)834-3Global Credit Research01 March 2019Yang-Myung Hong(1-212)834- Table of ContentsOverall Conference Takeaways.4Results of the Onsite Survey.6Link to presentations and related reports.17Summary of Panel Presentations.18Macro and Global Focused Panels.18Global Macro and Investment Outlook.18EM Outlook Across Credit and Local/FX.18Global Credit Outlook.19Investor Views on EM and Beyond.20EM Corporate Focused Panels.22Assessing Relative Value in EM Corporates.22How I learned to Stop Worrying and Love EM Corporate Fundamentals.23EM Corporate Bond Ownership and Investor Perspectives.24Primary MarketWhat Next for EM Credit After Scaling the$3 Trillion Mark.25Commodities Outlook and How Corporates Are Faring Amid the Volatility.25EM Banks:Challenges and Opportunities in 2019.26Anatomy of the EM Bond Index.26Thematic Panels.28How to ESG in EMC.28Latest Developments in Machine Learning and AI.28Latin America Focused Panels.29Latin America Energy and Trade Policy.29Corruption Probes and Legal Frameworks Across Latam.29Argentina Politics:Will Polarization Prevail?.30BrazilMacro Outlook and Corporate Implications.31Mexico:Political and Economic Challenges of the AMLO Administration.31Venezuela/PDVSA:A New Dawn?.32Asia Focused Panels.34China in the New World Order.34China Property MarketTechnical Shift or Cyclical Turn.35CEEMEA Focused Panels.36UkraineRight Policies to Navigate Through Presidential and Parliamentary Elections.364Global Credit Research01 March 2019Yang-Myung Hong(1-212)834- Overall Conference TakeawaysWe held our annual Global EM Corporate Conference in Miami from February 25 to February 27.This year marked the 10th edition of our flagship EM corporate conference,which has been growing together with the expansion of the asset class.At the time of the first conference in March 2010,we had less than 40 issuers participating,but this number almost quadrupled to close to 140 this year.In addition,the number of participating investors more than tripled,highlighting the significant rise in the dedicated PMs and buy-side analysts covering EM corporates.This reflects the substantial growth in the market,with the amount of bonds increasing from about$600bn from 700 different issuers in early 2010 to$2.2tn from 1,500 issuers currently.Figure 1:The growth of our conference mirrors the expansion of the EM corporate asset classSource:J.P.Morgan.Note:2019 as of February 28.The global scope of our asset class means that issuers from all the different EM regions participated in addition to diverse investors across EM dedicated,US,Europe,and Asia.These issuers and investors were connected through one-on-one and small group meetings that were held during the course of the conference.We also held numerous panel sessions across a variety of topics,involving outside experts,rating agency analysts,and investors in addition to J.P.Morgan staff.In this publication,we provide full results of the onsite survey and a summary of 22 panel presentations held during the conference.The constructive sentiment at the conference reflected the recent positive tone in markets as well as comfort on corporate fundamentals and technicals,but with some unease at current spread levels that do not seem to reflect much downside buffer.CEMBI Broad is up 3.6%YTD,more than recovering the-1.6%loss posted in 2018.Current spread at 275bp is back to the levels of mid 2018 and at our near-term target.While this is still a fair bit wider than the post-crisis tight of 208bp reached in February 2018,the majority of investors did not expect a revisit of such tights,with only a small minority voting for spreads to end the year below 250bp during our survey.The view on EM corporate fundamentals remained generally favorable as 72%of survey respondents expected stable to improving trends.Among the 28%that saw deterioration,24%expected that to be driven by sovereign rather 4084905827849611,1271,0411,1101,2611,3741,3851972192793234195076517048157878046057098601,1061,3791,6341,6921,8142,0762,1612,18905001,0001,5002,0002,50020092010201120122013201420152016201720182019(US$bn)High yield&NRInvestment grade5Global Credit Research01 March 2019Yang-Myung Hong(1-212)834- than aggressive behavior by the corporates.This was also reflected in the default expectations,where the vast majority anticipated modest default rates of below 4%.In addition,the lack of supply outside of Asia and limited net supply continue to paint a supportive picture for overall technicals.Figure 2:The rally so far this year is fostering positive sentiment,but with some uneaseSource:J.P.Morgan.The main risk factors were still related to the main macro themes of rising UST yields/stronger USD and trade protectionism.While the dovish turn by the Fed and recent developments from the US-China trade talks seem to mitigate these risk factors,there seems to be concern that they could return to put pressure on markets down the road.This is in line with our view that current spread levels factor in a limited buffer against such risk factors,with the risk-reward skewed to the downside in case they do not turn out as favorable as expected.On the other hand,accelerating growth in China and a modest recovery in global growth were cited as the upside catalysts.The country-level performance expectations were once again interesting,with Brazil picked as the top CEMBI country segment in 2019 whereas Mexico was selected as the worst.However,there seems to be somewhat of a backward-looking component in these responses given that Brazil has been the best performing country segment over the past year while Mexico has been among the worst.On a regional level,most respondents chose Latin America as the region to add risk and EM Europe as the one to reduce.1.0 1.5 2.0 2.5 3.0 3.5 200 250 300 350 400 450 500 550Jan-14Jul-14Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19(%)(bp)CEMBI Broad spreadUST 7-year(RHS,reverse)6Global Credit Research01 March 2019Yang-Myung Hong(1-212)834- Results of the Onsite SurveyFollowing are the key takeaways and results from the live audience poll held during the opening of our conference.The overall sentiment from the poll appeared to be favorable,with investors either planning to keep or increase their allocations to EM corporates in the near term,the majority seeing inflows or flat flows(only 5%seeing outflows),EM corporate spreads projected to stay range bound around current levels this year(with 1%expecting spreads 350bp),currencies seen by the majority as either mixed(depending on currency)or appreciating,EM corporate fundamentals and defaults not being a risk,and HY picked as the preferred rating allocation today.While we were not surprised to see EM equities picked as the top performer for 2019(as that has been the most popular choice for many years),it was interesting to see EM external credit essentially tied with EM equities for the#1 spot(29.7%vs.28.4%).Last year,it was EM local currency bonds that shared that position.Investors seemed to have consensus views on issues such as the impact that a US recession would have on EM(with only 11%expecting that EM can decouple from the US)and an array of other macro themes(i.e.,crude oil expected at$50-65/bbl by YE2019,EM GDP growth at 4.0-4.5%in 2019,only 11%seeing overall depreciation of EM FX,duration preference within+/-two years of the index).While investors current views regarding US Fed hikes were concentrated on one hike or Fed on hold(85%of respondents),in line with the J.P.Morgan view,higher UST rates/USD strength were still identified as the#1 risk for performance this year(30%),followed by a further increase in trade protectionism rhetoric/actions(22%).On the flip side,most investors picked China growth accelerating(31%),followed by modest recovery in synchronized global growth(25%),as providing the biggest upside opportunities for this year.In terms of their allocation decisions,just over half of investors picked Latin America as the region where they would likely add to in the near term,followed by Asia(25%),while nearly a third of investors picked EM Europe as the region where they are likely to reduce in the near term.We also asked a number of country-and segment-specific questions.On China,investors appear fairly sanguine on growth with nearly half expecting GDP growth in 2019 to remain around 6-7%and another 40%expecting a modest slowdown to 5-6%.Nevertheless,a fifth of investors still picked a China hard landing as the biggest risk to EM performance this year.Corporates from Brazil were picked by 37%to have the best total return in 2019,followed by Argentina with 24%,while the worst returns were expected from Mexican corporates(31%).This likely reflects investors expectations of a downgrade of the Mexican sovereign(by one notch by one or more agencies expected by 70%of respondents)and PEMEX(nearly 65%expecting a downgrade either this or next year).While sub 2%of investors expect Brazil pension reform not to be approved,most expect modest or semi-strong savings and mostly in the later part of 2019,with no investors expecting a strong(at least BRL 800bn in 10y)reform to pass in 1H19.On the impact of the recent tragedy experienced by Vale in Brazil,32%saw it as a one-off event without broader implications,while nearly 40%expected negative perception to be limited to the metals&mining industry in Brazil.7Global Credit Research01 March 2019Yang-Myung Hong(1-212)834- 1.What are your expectations on Fed moves in 2019?Source:J.P.Morgan Survey2.Where will crude oil(WTI)be at the end of 2019?Source:J.P.Morgan Survey3.EM GDP growth for 2019?Source:J.P.Morgan Survey7%59%26%7%0%0%10%20%30%40%50%60%70%Two hikesOne hikeFed on holdOne cutTwo cuts1%77%21%0%0%20%40%60%80%100%Below$50$50-65$65-80Above$8018.8%63.8%15.9%1.4%0%10%20%30%40%50%60%70%Below 4.0%4.0%4.5%4.5%5.0%Above 5.0%8Global Credit Research01 March 2019Yang-Myung Hong(1-212)834- 4.What do you consider to be the biggest risk to EM performance for the rest of 2019?Source:J.P.Morgan Survey5.What would provide the biggest upside to EM performance for the rest of 2019?Source:J.P.Morgan Survey6.If the US falls into a recession,how is EM likely to fare?Source:J.P.Morgan Survey30%22%17%7%4%19%0%10%20%30%40%Rising UST yields and/or stronger USDFurther increase in trade protection rhetoric andactionsFaltering EM growthUS recessionLower commodity pricesChina hard landing16.9%18.3%31.0%25.4%8.5%0%10%20%30%40%Improved trade rhetoricUST yields declining further from current levelsChina growth acceleratingModest r