Global Strategy "EM Multi Asset Chartpack: Our views for H2" Narain

研报英文原文证据摘录

Global Strategy "EM Multi Asset Chartpack: Our views for H2" Narain

the conflict would likely weaken the dollar and karen.hizon@ubs.com

broaden EM outperformance. +852-2971 6741

Bhanu Baweja

2. EM valuations may be more resilient to US rates risks than in prior cycles amid Strategist

North Asia's booming CA surpluses, the 'rollicking renminbi', and contained output bhanu.baweja@ubs.com

gaps. Our US economists' baseline is that we are standing at the peak of 1) US y/y +44-20-7568 6833

inflation (based on oil futures, and expectations for easing tariff pass-through and Teck Quan Koh

shelter inflation) and b) fiscal stimulus, especially net of higher gas spend. This suggests Strategist

a high bar for a Sept hike that would provoke another big upward repricing in US rates, teck-quan.koh@ubs.com

testing EM. But if upside US rates risks were to materialise, we think output gaps being +65-6495 4416

narrower in several countries than the US (eg China, Mexico, S. Africa), restrictive policy

already priced elsewhere (e.g Brazil, arguably Korea) and record China vs. EM

ex China rate differentials may cushion EM valuations vs. DM. We've been bullish

RMB since Nov and remind investors that it's nominal appreciation thus far is actually a

real depreciation. We see continued upside risks vs. forwards in H2 as deflation risks

dissipate and the trade surplus has stayed near record highs despite booming tech

imports, while trade negotiations with Europe this month could be a supportive catalyst.

(EM currencies outside of N Asia look more exposed to US rates risk, though, as

discussed below).

The case for EM outperformance would be more compelling if nascent signs of reflation

in China consumer extend and new AI products boost large internet stocks e.g. Tencent

amid 5y low valuations.