10 LatAm Catalysts Emerging

研报英文原文证据摘录

10 LatAm Catalysts Emerging

IdeaM

Catalysts for LatAm

1. US inflation surprised to the downside, but geopolitical risks continue to cloud

the energy outlook. Morgan Stanley believes oil prices remain skewed to the

upside, supported by lower inventory levels in both the US and Asia, as well as the

renewed hostilities in the Strait of Hormuz (SoH). With the Fed signaling that it

needs more time and additional data before easing policy, persistent upside risks

to energy prices could reinforce a hawkish bias and limit the market impact of

softer-than-expected US inflation. (see June CPI: Disinflation started)

2. Global flows to Emerging Markets reversed downwards in May for the first

time in over a year. We believe there is room for global investors to add back into

EM, especially if there is support from Fed policy. (see point #1)

3. Attractive positioning. The positioning for LatAm, Brazil, Mexico & Chile among

GEM funds is among the lowest relative to recent history. For instance, Brazil's

OW stood at 1.7% in May, versus 2.1% in April and a peak of 2.3% in March

4. Brazilian inflation has also become more benign, mirroring the recent trend in

the US. This moderation is unfolding alongside a slowing economy, broadly in line

with Morgan Stanley's expectations. A "not too hot, not too cold" slowdown

remains central to our constructive view on Brazilian equities and supports our

Overweight (OW) rating. Lower interest rates will be critical to reducing the risk

of fiscal dominance and facilitating a multi-year rebalancing of the economy—

from government-led growth and consumption toward investment and exports.

(see June IPCA: food deflation at the top)

5. Polling in Brazil has become more balanced, with markets now pricing the

probability of a policy shift at roughly 50/50.