Emerging Markets Cross-Asset Strategist, Emvest Partners

Guillaume Coutant

Emerging Markets Cross-Asset Strategist

Cross-Asset Emerging Markets Technical Research

Emvest Partners

Emvest Partners is the leading independent French financial analyst specializing in Emerging Markets for  Asset Managers, Hedge Funds and Family Offices. The studies provided by Emvest Partners are based on a top-down, cross-asset and relative-value approach of the financial markets. The articulation of macroeconomic analysis and technical analysis improves the consistency of the recommendations, the mitigation of risks of error and a significant improvement in performance.

Thematic (Sector/Industry)

South africa Financials / Thematic (Sector/Industry)

<h2>1.    ZAR outright swaps expected to be paid, with a stabilization of the curve:</h2><ul>
<li>ZAR outright swaps 2 &amp; 5y should be paid by 135bps to 200bps.</li>
<li>The 2-5 swap curve is expected to stop steepening and stabilize for the coming months.</li>
</ul><h2>2.     ZAR depreciation and underperformance expected:</h2><ul>
<li>
<a href="https://www.smartkarma.com/entities/24169" target="_blank" data-smartkarma-citation="entities:24169:1">Zar (USDZAR CURNCY)</a> bullish trend in place since 2008/2010 not over yet.</li>
<li>
<a href="https://www.smartkarma.com/entities/24169" target="_blank" data-smartkarma-citation="entities:24169:1">Zar (USDZAR CURNCY)</a> underperformance against EM peers such as <a href="https://www.smartkarma.com/entities/22833" target="_blank" data-smartkarma-citation="entities:22833:1">RUB (USDRUB CURNCY)</a> and <a href="https://www.smartkarma.com/entities/24229" target="_blank" data-smartkarma-citation="entities:24229:1">MXN (USDMXN CURNCY)</a> .</li>
</ul><h2>3.     South African equities to relatively outperform Emerging Markets:</h2><ul>
<li>
<a href="https://www.smartkarma.com/entities/24170" target="_blank" data-smartkarma-citation="entities:24170:1">Msci South Africa Index (MXZA INDEX)</a> 23/35% outperformance against <a href="https://www.smartkarma.com/entities/22892" target="_blank" data-smartkarma-citation="entities:22892:1">Msci Emerging Markets Index (MXEF INDEX)</a>.</li>
<li>TOP40/MSCI EM Ratio and USDZAR configurations are strongly linked.</li>
</ul><p><strong>RECOMMENDATION</strong></p><p>TIME HORIZON: 6-9 months                          CONVICTION:  excellent</p><h2>               Paid SASW5 above 7.45/7.21% towards 8.45% even 9.50%.</h2><h2>               USDZAR rise above 13.10 towards 17.90/19.10.</h2><h2>               ZARRUB and ZARMXN expected to drop by 11/17%.</h2>

1.    ZAR outright swaps expected to be paid, with a stabilization of the curve:
ZAR outright swaps 2 &amp; 5y should be paid by 135bps to 200bps.
The 2-5 swap curve is expected to stop steepening and stabilize for the coming months.
2.     ZAR depreciation and underperformance expected:

Zar (USDZAR CURNCY) bullish trend in place since 2008/2010 not over yet.

Zar (USDZAR CURNCY) underperformance against EM peers such as RUB (USDRUB CURNCY) and MXN (USDMXN CURNCY) .
3.     South African equities to relatively outperform Emerging Markets:

Msci South Africa Index (MXZA INDEX) 23/35% outperformance against Msci Emerging Markets Index (MXEF INDEX).
TOP40/MSCI EM Ratio and USDZAR configurations are strongly linked.
RECOMMENDATIONTIME HORIZON: 6-9 months                          CONVICTION:  excellent               Paid SASW5 above 7.45/7.21% towards 8.45% even 9.50%.               USDZAR rise above 13.10 towards 17.90/19.10.               ZARRUB and ZARMXN expected to drop by 11/17%.

South Africa: Rand Depreciation and Underperformance