April 12, 2018
Emerging Markets and the Global Economy in the Month Ahead:
Although EM's upturn is in early stages across many emerging economies and could be sustained for a couple of years in many others, EM's "rally cycle" is already four years long in hard currency debt and its extension hinges crucially on global growth acceleration. This is now being challenged by US policy initiatives and geopolitics. Will this pass without disrupting the still benign underlying global recovery, and do such initiatives still have additional legs?
PROD0000000000468520 1 | April 12, 2018Thematic Research This is an excerpt of EM Monthly: Stress testing growth , published on April 12, 2018. April 12, 2018 EM Monthly Stress Testing Growth Emerging Markets and the Global Economy in the Month Ahead: Although EM's upturn is in early stages across many emerging economies and could be sustained for a couple of years in many others, EM's "rally cycle" is already four years long in hard currency debt and its extension hinges crucially on global growth acceleration. This is now being challenged by US policy initiatives and geopolitics. Will this pass without disrupting the still benign underlying global recovery, and do such initiatives still have additional legs? LATAM Corporates: US-China Trade Dispute's Potential Repercussions Trade dispute between the US and China has continued to escalate and fears of an eventual trade war has increased market volatility. Steel and aluminum producers were directly affected by tariffs, but their ultimate impact may prove to be muted (for LatAm issuers) by exemptions and LatAm steel producers with significant US assets are in a more favorable position. Latin America could benefit from product diversions resulting from US-China trade disputes, as long as they don't escalate to a full-blown trade war, which could lead to a global economic slowdown. We look at the consequences for exports, foreign exchange and inflation. For instance, what is the impact on Brazilian beef and pork producers from increased Chinese tariffs on US imports? EM Credit Spreads: Macro Drivers and Shock Responses In our theme piece "EM Credit Spreads: Macro Drivers and Shock Responses" we consider a number of different variables across several risk environments to answer the question of what drives Emerging Market Bond Index Diversified spreads. Having established a baseline model for the current period we look at how spreads could react to growth, inflation and rate hike shocks. EM inflation - Paring losses in March After weakening in February, global EM inflation is expected to stabilize in March, and grind gradually higher the rest of the year. Our composite measures of inflation show… Singapore's positive transformation We use concepts from Urban Economics to assess Singapore's weaknesses as a city and the likely impact of policies now coming through. Authors www.dbresearch.com Drausio Giacomelli +1(212)2507355 firstname.lastname@example.org Hongtao Jiang +1(212)250-2524 email@example.com Sameer Goel +656423 6973 firstname.lastname@example.org Juliana Lee (852)2203-8312 email@example.com Elina Ribakova +44(20)7547-1340 firstname.lastname@example.org Deutsche Bank Research EM Monthly 2 | April 12, 2018Thematic Research © Copyright 2018. Deutsche Bank AG, Deutsche Bank Research, 60262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite “Deutsche Bank Research”. The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, licensed to carry on banking business and to provide financial services under the supervision of the European Central Bank (ECB) and the German Federal Financial Supervisory Authority (BaFin). In the United Kingdom this information is approved and/or communicated by Deutsche Bank AG, London Branch, a member of the London Stock Exchange, authorized by UK’s Prudential Regulation Authority (PRA) and subject to limited regulation by the UK’s Financial Conduct Authority (FCA) (under number 150018) and by the PRA. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Inc. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. US business interests in China US business interests in China are much larger than trade data shows. Trade tensions will persist, but we doubt either side has the intention to escalate it into a full blown trade war. For important disclosure information please see: https://research.db.com/ Research/Disclosures/Disclaimer