Halister News

(Bloomberg) -- Emerging markets go into the second quarter with the risk of local politics interrupting a broadly based asset market recovery. MAIN RISKS

• CEEMEA
  • The term of Turkey’s respected CB governor Basci expires on April 19 and there is still uncertainty who comes next; Basci has been heavily criticized by the government and is seen as very unlikely to continue; an insider would be a relative positive but the appointment carries high risk for all Turkish assets
  • Political ructions continue in South Africa with the ruling that president Zuma violated the constitution; successful impeachment is unlikely as Zuma’s ANC party still has the majority in parliament but the situation only heightens tensions that continue to weigh on South Africa’s credit rating and retain a risk of becoming a much more serious political crisis
  • South Africa’s CPI recently printed at the highest level since 2009 and there are fears inflation is accelerating; with the exact opposite problem, Romania’s CPI is at its lowest level in history and concern around their deflationary spiral is mounting

• ASIA
  • Singapore dollar may extend its strong start to the year if the central bank holds policy steady in April, as expected by some analysts. SGD has risen into the strong half of its trading band, which may lead to convergence between 1-year SGD and USD swaps
  • Malaysian ringgit is coming off its best quarter since 1973 with expected inflows related to state oil dividends likely to support currency. Foreign funds are also returning to the local stock market as palm oil prices rise toward 2-year highs

• LATAM
  • Rousseff’s impeachment process will certainly dominate the debate in Brazil; voting in Lower House likely to happen in the second half of April although headlines tied to the process and vote-counting speculation will be major BRL catalysts since the beginning of the month
  • BCB’s FX intervention also may continue to play a big role on intraday dynamics; bank signals it aims at reducing its ~$103b in outstanding short USD swap positions; daily auctions and their results may be key on curbing BRL swings
  • Carwash probe progress may also be a potential catalyst to BZ assets; Folha, a local major newspaper, reported that a Supreme Court Minister is analyzing a fresh plea bargain from executives of building co. Andrade Gutierrez
    • Plea bargain could influence Electoral Supreme Court case aimed at canceling Rousseff’s and VP Temer’s 2014 election
  • MXN may be sensitive to potential headlines tied to govt support to Pemex; govt-controlled oil company situation is one of main reasons behind Moody’s outlook cut of Mexico’s A3 rating to negative from stable
  • COP’s ~10% gains seen in March may lead Banrep to interrupt tightening cycle Apr. 29 after 200bps in hikes; FinMin Cardenas said that peso at 3,000 level puts officials "at ease" in that current above-target CPI will fall

• CALENDAR (based on local dates):
• April 4: Turkey CPI; Chile minutes
• April 5: India central bank meeting; Colombia CPI; Chile IMACEC
• April 7: China and Malaysia foreign reserves; Mexico CPI; Singapore GDP and Central bank meeting (date to be confirmed)
• April 8: Hungary CPI; Chile CPI; Brazil CPI
• April 11: China CPI; Malaysia IP; Romania CPI
• April 12: Chile rate decision
• April 13: China trade balance
• April 15: China 1Q GDP and IP; Indonesia trade balance
• April 18: Singapore exports
• April 19: Bank of Korea meeting; Turkey CB Governor Basci’s term expires
• April 20: Malaysia CPI; South Africa CPI; Turkey rate decision; Brazil Bi-weekly CPI
• April 21: Indonesia central bank meeting
• April 22: Malaysia foreign reserves
• April 25: Singapore CPI
• April 26: South Korea 1Q GDP; Hungary rate decision
• April 27: Chile Minutes; Brazil rate decision
• April 29: South Korea IP; Taiwan 1Q GDP; Russia rate decision; Colombia rate decision
• NOTE: Mark Cudmore, Davison Santana and Mark Cranfield are strategists who write for Bloomberg. The observations they make are their own and are not intended for investment advice.