摩根士丹利-新兴市场-投资策略-全球新兴市场策略:近距离观察高收益类产品-2019.2.25-32页
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摩根士丹利
新兴
市场
投资
策略
全球
近距离
观察
收益
类产品
2019.2
25
32
James.LJaiparan.KSheena.SFilip.DSimon.WAndres.JIoana.ZGilberto.Hernandez-GMin.DChun.Him.CBelle.CMORGAN STANLEY&CO.INTERNATIONAL PLC+James K LordSTRATEGIST+44 20 7677-3254Jaiparan S KhuranaSTRATEGIST+44 20 7677-6671Sheena ShahSTRATEGIST+44 20 7677-6457Filip DenchevSTRATEGIST+44 20 7677-3166MORGAN STANLEY&CO.LLCSimon WaeverSTRATEGIST+1 212 296-8101Andres JaimeSTRATEGIST+1 212 296-5570Ioana ZamfirSTRATEGIST+1 212 761-4012Gilberto A Hernandez-GomezSTRATEGIST+1 212 296-8940MORGAN STANLEY ASIA LIMITED+Min DaiSTRATEGIST+852 2239-7983Chun Him CheungSTRATEGIST+852 2239-1261Belle ChangSTRATEGIST+852 3963-0668EM sovereign credit:Moderating our bullishness onHY Looking for positive China spillovers South Africa budget and EskomAsset allocation;Trades overview Snapshots;Live trades:Rationale and risksGlobal EM StrategistGlobal EM Strategist|Global GlobalA Closer Look at High YieldWe dont see a strong case to turn back to a bullish stance onEM yet.Within high yield credit we rotate somerecommendations,preferring Argentina and Bahrain but havingreduced Oman and Ukraine to neutral.Long CNY is one of ourfavourite currency positions.Rotating our high yield credit exposure:After a good run,we think the highyielders in sovereign credit are due for a pause and take the opportunity toswitch country exposures in order to lower our beta.In Europe,we recentlyremoved our OW in Ukraine.In MENA HY,we like Bahrain and avoid Lebanon.Among other high-yielders in the region,we have a preference for Egypt overOman.In LatAm,we maintain a like stance on Argentina but anticipate gainsslowing in Ecuador,given recent outperformance but a still challenging outlook.Hopes are high:EM has performed better over the past week,lifted by furtherdovish commentary from Fed speakers and growing expectations for a US-Chinatrade agreement.However,we are not yet convinced that the timing is right tojump back in,given the disconnect between global growth trends and risk assets,as well as the dovish market pricing for the fed funds rate.We do not believethat this is 2016-lite,and we bide our time,sticking with a neutral stance for now.A currency accord:So far,details of any trade agreement are scarce.A deal tokeep CNY stable appears within reach,though the enforcement mechanism is notclear.There are media reports indicating that stable might mean keepingUSDCNY below 7.China has also made a commitment to buy more US soybeans,but details on key US concerns such as IP,technology transfer and Chinese statesubsidies are scant.President Trump has stated that the biggest decisions willbe made by himself and President Xi at an expected meeting in March.Whileexpectations are high already,an upside risk for EM would be a commitment toremove existing tariffs.We expect CNY to remain strong throughout the negotiations and,with ourexpectation for strong capital inflows into China over 2019,long CNY is one ofour core views.As our colleagues mention here,January capital inflows were thestrongest in five years.More inflows are on the way.We expect that a strongCNY will benefit the region and we maintain a short EURIDR 3m NDF position.China and Europe:Movements in CNY have an influence over Asian currencies,but do they impact EUR and USD?Does CNY have global influence?If so,thenour bullish view on CNY versus USD could spill over to EM,beyond Asia.Onechannel could be via a stronger EURUSD,but we find only a weak relationshipbetween CNY and EUR.Stronger credit growth might help,as this would likelylift European exports,yet we only expect a modest pick-up here and in any caseour banking analysts are sceptical about the quality of the credit growth we sawin January.Due to the nature of the fixed income market,issuers orbonds of the issuers recommended or discussed in thisreport may not be continuously followed.Investors mustregard this report as providing stand-alone analysis andshould not expect continuing analysis or additional reportsrelating to such issuers or bonds of the issuers.Morgan Stanley does and seeks to do business withcompanies covered in Morgan Stanley Research.As aresult,investors should be aware that the firm may have aconflict of interest that could affect the objectivity ofMorgan Stanley Research.Investors should considerMorgan Stanley Research as only a single factor in makingtheir investment decision.For analyst certification and other important disclosures,refer to the Disclosure Section,located at the end of thisreport.+=Analysts employed by non-U.S.affiliates are not registered withFINRA,may not be associated persons of the member and may notbe subject to NASD/NYSE restrictions on communications with asubject company,public appearances and trading securities held bya research analyst account.1February 25,2019 11:37 AM GMT EM sovereign credit:Moderating our bullishness on HYSimon Waever,Jaiparan KhuranaOur call in the 2019 outlook was for high yielders,and single Bs in particular,to dowell,both outright and relatively.Given a strong start to the year,with single Bstightening by 104bp year-to-date and 75bp since end-November,we dial down ourbullishness.For now,we expect spreads to trade sideways and for returns to comelargely from carry instead.At the country level,we recently removed our likestance on Ukraine although still see the 2032 as attractive across the curve.InLatAm,we maintain our like stance on Argentina due to cheap valuations,with apreference for the 10y sector.While its too soon to fade the move tighter inEcuador,with the potential for the curve to bull steepen further,valuations and achallenging outlook prevent a more bullish view.In MENA,we prefer to bepositioned in Bahrain and Egypt over Oman,Jordan and Tunisia.MENA HY:Time for decompression?MENA high yield sovereigns,excluding Turkey,currently account for a 9.03%weight inEMBIG Div.Their weight will likely rise further to over 11%upon Bahrains full indexinclusion and Omans 2019 issuance,and as such the space cannot be ignored.We haveseen a spread compression between MENA high-yielding sovereign credits in 2019.Thespread compression is not unusual given the strong EMBI performance,but this alsoprovides an opportunity to rotate out of weaker into stronger credits,in our view.Evencomparing broadly within EM,the MENA HY index has outperformed both the LatAmHY and SSA index in 2019,indicating that its worthwhile to rotate into defensive credits.We prefer to be positioned in Bahrain and Egypt over Oman,Jordan and Tunisia.Ourpreference for Bahrain and Egypt is on the back of ongoing reforms and as theirexternal funding gap is largely covered for 2019.On the other hand,we have concernsabout moderating FX reserve adequacy in Oman,tight valuations in Jordan and recentwage increases in Tunisia.Lastly,we are fairly cautious on Lebanon and would avoid it asspreads have tightened aggressively and reforms are likely to be drawn out.Bahrain:We have been sanguine on Bahrain for a while but even we were positivelysurprised by the sovereign registering a fiscal deficit of just US$2.3 billion in 2018,35%smaller than the targeted US$3.6 billion,based on preliminary data.Furthermore,Bahrain also implemented a VAT in January 2019 which should support further fiscalconsolidation.On the external side,while current oil prices are below the externalbreakeven price,the US$10 billion GCC support package should largely cover thefunding gap.The upcoming redemption of US$435 million in May 2019 should not leadto rollover pressure as it was a privately placed sukuk.While the easing of externalliquidity pressure was adequately priced into bond spreads,we dont think that thespreads adequately factor in the fiscal consolidation yet.2From a valuation perspective,with OMAN-BHRAIN spread differentials tightening we seemore value in Bahrain.We also think that technicals will remain supportive,notwithstanding the recent quasi-sovereign issuance,as EMBI investors are largelypositioning underweight and net supply from the sovereign should be manageable in2019.We move Bahrain up to a like valuation stance within the MENA HY context.Egypt:Egypts primary balance is now in a surplus and even the basic balance on a 12-month rolling basis has been positive for 2Q18 and 3Q18.We also think that the IMFprogramme remains on track.While fundamentals were never a concern for us,we werecautious ahead of supply.With US$supply out of the way and the size of the issuancesurprising on the downside,we think that one should be looking to add exposure toEGYPT eurobonds.While the Egypt curve has tightened marginally more than EMBI in2019,it has still lagged Tunisia,which we think was unwarranted.Even in the broaderEM context,Eqypt has underperformed the Kenya curve significantly;with supply fromKenya expected in the near term,some of Egypts underperformance may reverse.We prefer being positioned in the 30y over the belly since Egypt will likely issue EUR-denominated bonds in the near term.The EUR bonds are likely to be in the belly and,asthey usually come at a discount to the US$curve on a cross-currency swap basis,wemay see some rotation into them from the US$curve,which puts pressure on spreads.However,we refrain from assigning a like valuation stance to Egypt because of its higherbeta versus Bahrain.We have turned neutral on EM credit recently from being bullishearlier and as such are looking to position more defensively.Oman:With 2019 budget forecasts looking ambitious versus the 2018 outturn,slippagescannot be ruled out.We dont see much scope for raising funding via domestic marketsand sovereign wealth fund withdrawals beyond OMR 800 million,and as such most ofthe funding should be via external markets.As such,we think that while supply in 1H19will be smaller than initial market expectations,Oman may revisit the markets in 2H19with US$2-3 billion of issuance.We have discussed the funding issues in detail in EMStrategy:Oman Sovereign:The Funding Conundrum,February 14,2019.We also thinkthat risks in Oman are shifting from the fiscal side to the external side.Given thatOmans current account deficit is also large,we think that the sovereign will still need toraise external funding to maintain FX reserves at an adequate level.Exhibit 1:MENA HY trades flat to SSA HY250300350400450500550600650700Dec-17Feb-18Apr-18Jun-18Aug-18Oct-18Dec-18Spread(bp)EMBIG DIVLatAm HYAsia HYRussia&CIS HYMENA HYSSASource:Bloomberg,Morgan Stanley ResearchExhibit 2:MENA HY benchmark bond movement200300400500600700800900Jan-18Apr-18Jul-18Oct-18Jan-19Spread(bp)EGYPT 28BHRAIN 28OMAN 28JORDAN 27LEBAN 28BTUN 25Source:Bloomberg,Morgan Stanley Research3We also think that in the case of Oman its too soon to start factoring in a bailout byGCC allies,and therefore see Omani spreads trading wider than Bahraini spreads.Wewould look to position in Oman 5y.We think that the sovereign may try to avoidissuance in the front end especially if it tries to scale back on issuance given that itsdebt-redemption profile including eurobonds,loans and the PXF facility is front-loaded.We also think that OMR FX forwards are a cheap hedge for credit portfolios.Jordan:The IMF recently reached a staff-level agreement with Jordan on the secondreview under the Extended Fund Facility,a credit-positive.We think that the key event towatch out for would be the donor conference scheduled for February 28.If GCCcountries upsize their 2018 pledge when they offered US$2.5 billion,this would likely beseen positively as in this scenario markets should start factoring in the presence of bothmultilateral and bilateral support.This should allay concerns about the externalfunding gap.The sovereign also made some progress on reforms as it was able to pass anew income tax law,which should support fiscal consolidation.While the recent developments have been positive,the JORDAN curve trades thetightest within MENA HY,making it less attractive.We think that it should at least bewider to BHRAIN,technicals notwithstanding,as the latter enjoys a greater regionalsupport.We acknowledge that Bahrains fiscal deficit is higher than Jordans but from aflow perspective the consolidation has been faster.With Jordan facing US$1.4 billion inexternal debt redemptions,including the US$1 billion AID bond,in 2019 and the IMFprogramme back on track,we also expect supply,which should moderate the positivetechnicals.Tunisia:We had recently highlighted that the key demand by the IMF is to address thehigh public sector wage bill of over 14%of GDP,one of the highest in the world.Whilethe government was looking to keep the planned wage increase in check,it was met bystrong resistance from the workers union,UGTT.Post a large strike in January,thegovernment agreed to increase the monthly wage by TND 180,albeit over 18 months,which is closer to UGTTs demand of an increase of TND 205-270 versus thegovernment offer of TND 40-80.We think that this shows limited flexibility for the sovereign to keep the public sectorwage bill in check.If the agreement impacts the IMFs next tranche disbursement,markets could see it negatively.As spreads have continued to rally despite thesedevelopments,in line with broader EM,we would stay on the sidelines for now.Exhibit 3:EGYPT has underperformed KENINT300350400450500550600650Jan-18Mar-18May-18Jul-18Sep-18Nov-18Jan-19Z-spread(bp)EGYPT 28KENINT 28NGERIA 27Source:Bloomberg,Morgan Stanley ResearchExhibit 4:LEBAN is now tighter than IMF-backed sovereigns300400500600700800900Jan-18Apr-18Jul-18Oct-18Jan-19Z-spread(bp)LEBAN 28ECUA 28ARGENT 28UKRAIN 27Source:Bloomberg,Morgan Stanley Research4Lebanon:Lebanon eurobonds have rallied sharply since the government formation andon expectations of CEDRE reforms.We think that the reforms will be drawn out andhence its a bit too soon to start factoring in the impact on the sovereign credit profile.For instance,we recently estimated that,ceteris paribus,a fiscal consolidation of 4-5%ofGDP is needed to stabilise debt/GDP.The sovereign is indeed targeting a similarmagnitude of consolidation under its CEDRE conference commitments but it is to becarried out over a period of five years.It means that debt/GDP in the near term is stilllikely to increase.We are therefore watching for a stabilisation in monetary conditionsbefore we turn back to neutral.Admittedly,the government formation happened onlyat end-January and we dont have data for February yet,but January data remainunsupportive of a change of view;based on monetary aggregates,resident deposits sawan outflow of US$1.6 billion in January.From a valuation perspective,the Lebanon curve is now trading tighter than Argentina,Ukraine and Ecuador,which all benefit from IMF support,indicating little value in addingLebanon risk at these levels.In fact,one is better off selling CDS versus buying cash asthe basis has turned significantly positive.If the banking sector deposit flows remainsubdued,its bid for Lebanon eurobonds will likely moderate,which should lead todownward pressure on the basis.With credit curves flat we prefer to be in the front endof the cur