emerging markets and latin america: new lows ahead? …

EMERGING MARKETS AND LATIN AMERICA:NEW LOWS AHEAD?

JUNE 2016

A PRESENTATION BY:

Santiago E. Gomez, Editor/Strategist Emerging Markets Strategy & Geopolitical [email protected]

[email protected] • www.bcaresearch.com • Copyright © 2016 BCA Research Inc. All Rights Reserved. Refer to last page for important disclaimer.

1

BCA RESEARCH INC. JUNE 2016


IMPORTANCE OF EM IN WORLD ECONOMY

8

7

6

5

4

3

2

2000 2002 2004 2006 2008 2010 2012 2014 2016

8

7

6

5

4

3

2

IMPORTS IN US$ AS A % OF GLOBAL GDP*VULNERABLE EMERGING MARKETS

(INCLUDING CHINA)**U.S.EUROPEAN UNION

%ofGDP

%ofGDP

* SOURCE: IMF DIRECTION OF TRADE.** DEVELOPING MARKETS EXCLUDING MEXICO, POLAND, CZECH REPUBLIC, HUNGARY, SLOVANIA, AND ROMANIA.

© BCA Research 2016

45

40

35

30

25

20

15

10

2002 2004 2006 2008 2010 2012 2014 2016

45

40

35

30

25

20

15

10

40

35

30

25

20

15

40

35

30

25

20

15

KOREA

% %AS A % OF TOTAL EXPORTSEXPORT DESTINATION TO:

U.S.EUROPEAN UNIONCOMMODITY PRODUCERS*EMERGING ASIA

CHINA

% %

* INCLUDES LATAM, AFRICA, MIDDLE EAST, RUSSIA, AUSTRALIA & CANADA.


6

5

4

3

2

1

2000 2002 2004 2006 2008 2010 2012 2014 2016

6

5

4

3

2

1

EXPORTS TO VULNERABLE EMERGING MARKETSAS A % OF THEIR GDP*:

U.S.GERMANYJAPAN

%ofGDP

%ofGDP

* SOURCE: IMF DIRECTION OF TRADE; DEVELOPING MARKETS EXCLUDING MEXICO, POLAND, CZECH REPUBLIC, HUNGARY, SLOVENIA, ROMANIA AND THE MIDDLE EAST.

9

8

7

6

5

4

3

2

1

1990 1995 2000 2005 2010 2015

9

8

7

6

5

4

3

2

1

REAL CAPEX AS % OF GLOBAL REAL GDP*:EM**U.S.JAPANEUROPEAN UNION

% %

* IN 2000 CONSTANT US$; SOURCE: WORLD BANK.** INCLUDES CHINA, KOREA, POLAND, AFRICA, TURKEY, INDIA, PHILIPPINES, THAILAND, INDONESIA, MEXICO, BRAZIL, MALAYSIA, CHILE, RUSSIA AND COLOMBIA.



Commodity Producers

Commodity Producers

EU

EU

U.S.

U.S.

Non-Japan Asia

Non-Japan Asia

2



GLOBAL MANUFACTURING/TRADE

20

10

0

-10

-20

2006 2008 2010 2012 2014 2016

20

10

0

-10

-20

EMERGING MARKETS IMPORT VOLUME*Ann%

ChgAnn%Chg

* SHOWN AS A 3-MONTH MOVING AVERAGE; SOURCE: NETHERLANDS BUREAU FOR ECONOMIC POLICY ANALYSIS.

0

-5

-10

2013 2014 2015 2016

0

-5

-10

JAPAN: EXPORT VOLUME*Ann%

ChgAnn%Chg

* SHOWN AS A 3-MONTH MOVING AVERAGE.

10

5

0

2011 2012 2013 2014 2015 2016

10

5

0

GLOBAL EXPORTS VOLUME*

Ann%Chg

Ann%Chg

* SOURCE: NETHERLANDS BUREAU FOR ECONOMIC ANALYSIS.




10

0

-10

-20

-30

2004 2006 2008 2010 2012 2014 2016

10

0

-10

-20

-30

20

0

-20

-40

20

0

-20

-40

20

0

-20

-40

20

0

-20

-40

DOMESTICAnn%Chg

Ann%Chg

GERMANY:MANUFACTURING ORDER VOLUME

FROM EURO AREAAnn%

ChgAnn%Chg

FROM NON-EURO AREAAnn%

ChgAnn%Chg

* SHOWN AS A 3-MONTH MOV. AVG.; SOURCE: DEUTSCHE BUNDESBANK.

15

10

5

0

-5

-10

-15

2006 2008 2010 2012 2014 2016

15

10

5

0

-5

-10

-15

IMPORT VOLUME*EURO AREAU.S.**

Ann%Chg

Ann%Chg

* SHOWN AS A 3-MONTH MOVING AVERAGE.** DEFLATED BY IMPORT PRICE INDEX (ALL COMMODITIES; END USE).



Still contracting

3



EM STOCKS POINT TO FURTHER WEAKNESS IN GLOBAL INDUSTRIAL CYCLE

50

40

30

20

10

0

-10

-20

2004 2006 2008 2010 2012 2014 2016

50

40

30

20

10

0

-10

-20

CAPITAL GOODS IMPORTS* (IN U.S. DOLLARS):CHINA

Ann%Chg

Ann%Chg

* AGGREGATE OF 17 EMERGING ECONOMIES; SUM OF IMPORTS OF CAPITAL GOODS IN US$; BOTH SERIES SHOWN AS A 6-MONTH MOVING AVERAGE.

15

10

5

0

-5

-10

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

80

60

40

20

0

-20

-40

GLOBAL INDUSTRIAL PRODUCTION* (LS)EMERGING MARKETS STOCK PRICES IN LOCAL CURRENCY TERMS** (ADVANCED BY 6 MONTHS; RS)

Ann%Chg

Ann%Chg

* SHOWN AS A 3-MONTH MOVING AVERAGE; SOURCE: NETHERLANDS BUREAU FOR ECONOMIC POLICY ANALYSIS.** SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).

30

20

10

0

-10

-20

-30

2004 2006 2008 2010 2012 2014 2016

30

20

10

0

-10

-20

-30

CAPITAL GOODS IMPORTS IN US$EMERGING MARKETS EXCLUDING CHINA*

Ann%Chg

Ann%Chg

* AGGREGATE OF 17 EMERGING ECONOMIES; SUM OF IMPORTS OF CAPITAL GOODS IN US$; SHOWN AS A 3-MONTH MOVING AVERAGE.


© BCA Research 2016© BCA Research 2016

4



INVENTORY OVERHANG AND OUTPUT CONTRACTION IN GLOBAL MANUFACTURING

1.3

1.2

1.1

1.0

2004 2006 2008 2010 2012 2014 2016

1.3

1.2

1.1

1.0

1.5

1.4

1.3

1.2

1.1

1.0

.9

1.5

1.4

1.3

1.2

1.1

1.0

.9

1.4

1.3

1.2

1.4

1.3

1.2

1.4

1.3

1.2

1.1

1.0

1.4

1.3

1.2

1.1

1.0

KOREA*

TAIWAN*

MANUFACTURINGINVENTORY-TO-SHIPMENT RATIO

U.S.

JAPAN


8

4

0

-4

2012 2014 2016

8

4

0

-4

3

2

1

0

3

2

1

0

10

5

0

-5

10

5

0

-5

5

0

-5

-10

5

0

-5

-10

4

2

0

-2

4

2

0

-2

GERMANY**

Ann%Chg

Ann%Chg

U.S.**Ann%Chg

Ann%Chg

JAPAN**

Ann%Chg

Ann%Chg

MANUFACTURING OUTPUT

TAIWAN**

Ann%Chg

Ann%Chg

KOREA*

Ann%Chg

Ann%Chg

* SHOWN AS A 6-MONTH MOVING AVERAGE.** SHOWN AS A 3-MONTH MOVING AVERAGE.

© BCA Research 2016 © BCA Research 2016

5



U.S. MANUFACTURING & CHINESE EXPORTS

25

20

15

10

5

0

-5

-10

-15

-20

1995 2000 2005 2010 2015

25

20

15

10

5

0

-5

-10

-15

-20

U.S.:TOTAL RAILROAD CARLOAD

EXCLUDING PETROLEUM AND COAL* (LS)MANUFACTURING OUTPUT** (RS)

Ann%Chg

Ann%Chg

* SHOWN AS A 10-WEEK MOVING AVERAGE.** SOURCE: FEDERAL RESERVE.

15

10

5

0

-5

-10

-15

1995 2000 2005 2010 2015

15

10

5

0

-5

-10

-15

U.S. INTERMODAL CARLOAD

Ann%Chg

Ann%Chg

SHOWN AS 20-WEEK MOVING AVERAGE.

7.2

7.1

7.0

6.9

6.8

6.7

6.6

2006 2008 2010 2012 2014 2016

30

20

10

0

-10

CHINA CONTAINER FREIGHT INDEX* (LS)CHINA EXPORT VOLUME** (RS)

Ann%Chg

* SHOWN AS A NATURAL LOGARITHM; SOURCE: SHANGHAI SHIPPING EXCHANGE.** SHOWN AS A 6-MONTH MOVING AVERAGE.




6



GLOBAL DEFLATIONARY PRESSURES ARE ESCALATING

10

0

-10

2004 2006 2008 2010 2012 2014 2016

10

0

-10

20

0

-20

20

0

-20

10

0

-10

10

0

-10

EXPORT PRICE IN US$:TAIWAN

Ann%Chg

Ann%Chg

EXPORT PRICE IN US$:KOREA

Ann%Chg

Ann%Chg

WORLD MANUFACTURED GOODS PRICES* IN US$

Ann%Chg

Ann%Chg

* SOURCE: NETHERLANDS BUREAU FOR ECONOMIC POLICY ANALYSIS.

-10

0

10

2004 2006 2008 2010 2012 2014 2016

-10

0

10

10

0

-10

10

0

-10

EXPORT PRICE IN US$*:MEXICO (MANUFACTURED GOODS)Ann%

ChgAnn%Chg

EXPORT PRICE IN US$*:CHINA

Ann%Chg

Ann%Chg

* SHOWN AS 3-MONTH MOVNG AVERAGE.


Deflation Deflation

7



STEALTH RMB DEVALUATION

104

102

100

98

96

94

92

2014 2015

104

102

100

98

96

94

92

6.1

6.2

6.3

6.4

6.5

6.6

5.0

4.5

4.0

3.5

3.0

2.5

JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL

RMB vs. NEW BASKET*

CHINA:RMB vs. USD (LS)12-MONTH SWAP RATE (RS)

USD/CNY

%

* BCA ESTIMATE BASED ON CFETS CURRENCY BASKET; REBASED TO 100 AT DECEMBER 31, 2014.

6.6

6.5

6.4

6.3

6.2

6.1

2014 2015

320

310

300

290

280

270

260

250

JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL

RMB vs. USD (LS)GLOBAL STOCK PRICES IN SDR* (RS)

USD/CNY

* SPECIAL DRAWING RIGHT; SOURCE: IMF.

12

8

4

0

-4

-8

-12

1995 2000 2005 2010 2015

12

8

4

0

-4

-8

-12

-16

GLOBAL INDUSTRIAL PRODUCTION* (LS)TRADE WEIGHTED DOLLAR INDEX**

SHOWN AS AN 18-MONTH RATE OF CHANGE (RS,INVERTED)

Ann%Chg

%

* SOURCE: NETHERLANDS BUREAU FOR ECONOMIC POLICY ANALYSIS.** NOTE: NOMINAL BROAD BASED TRADE WEIGHTED DOLLAR; SOURCE: FEDERAL RESERVE.



New lows

?

8



GLOBAL DEFLATION, RETURN ON CAPITAL, & EM

20

10

0

-10

-20

2006 2008 2010 2012 2014 2016

20

10

0

-10

-20

15

10

5

0

-5

15

10

5

0

-5

10

5

0

-5

-10

10

5

0

-5

-10

10

5

0

-5

-10

-15

10

5

0

-5

-10

-15

30

20

10

0

-10

-20

30

20

10

0

-10

-20

MEXICO (MANUFACTURED GOODS)Ann%Chg

Ann%Chg

CHINA*Ann%

ChgAnn%Chg

JAPANAnn%

ChgAnn%Chg

TAIWAN

Ann%Chg

Ann%Chg

KOREA

EXPORT PRICES:IN US$IN LOCAL CURRENCY TERMS

Ann%Chg

Ann%Chg

* HONG KONG RE-EXPORT PRICE AS A PROXY; SOURCE: HONG KONG MONTHLY DIGEST OF STATISTICS.

20.0

17.5

15.0

12.5

10.0

1995 2000 2005 2010 2015

11.0

10.8

10.6

10.4

10.2

10.0

9.8

9.6

9.4

9.2

20.0

17.5

15.0

12.5

10.0

103.5

103.0

102.5

102.0

101.5

101.0

100.5

100.0

99.5

99.0

98.5

STOCK PRICES IN LOCAL CURRENCY TERMS*** (RS)

%

REAL EFFECTIVE EXCHANGE RATE* (RS)

RETURN ON EQUITY: NON-FINANCIALS** (LS)

EMERGING MARKETS:

%

* EQUITY MARKET-CAP WEIGHTED OF 19 COUNTRIES; AVERAGE OF PPI AND CPI BASED; REBASED TO 100 AT JANUARY 2001; SOURCE: J.P. MORGAN CHASE & CO.** SOURCE: DATASTREAM; BCA CALCULATION.*** SHOWN AS A NATURAL LOGARITHM; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).


9



EM INDICATORS DO NOT SIGNAL A GROWTH RECOVERY

200

150

100

50

0

-50

-100

2006 2008 2010 2012 2014 2016

200

150

100

50

0

-50

-100

120

100

80

60

40

20

0

-20

120

100

80

60

40

20

0

-20

160

120

80

40

0

-40

-80

-120

160

120

80

40

0

-40

-80

-120

CHINA*BPs BPs

YIELD CURVE: 5-YEAR/6-MONTH SWAP RATES

TAIWAN

BPs BPs

KOREA

BPs BPs

* SHOWN AS A 10-DAY MOVING AVERAGE.

100

75

50

25

0

-25

-50

2006 2008 2010 2012 2014 2016

100

75

50

25

0

-25

-50

100

75

50

25

0

-25

-50

100

75

50

25

0

-25

-50

EM SMALL CAP

EARNINGS PER SHARE* IN LOCALCURRENCY TERMS:Ann%

ChgAnn%Chg

EM LARGE CAP

Ann%Chg

Ann%Chg

* CALCULATED AS STOCK PRICES DIVIDED BY P/E RATIO; SHOWN AS A 3-MONTH MOVING AVERAGE; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).

40

20

0

-20

-40

-60

2004 2006 2008 2010 2012 2014 2016

40

20

0

-20

-40

-60

EMERGING MARKETS STOCKS NET EARNINGSREVISIONS*

% %

* SOURCE: IBES.




-25%

-25%

10



NO SIGN OF MAJOR UPTURN

55

54

53

52

51

50

2012 2013 2014 2015 2016

55

54

53

52

51

50

52

51

50

49

48

52

51

50

49

48

CHINA NON-MANUFACTURING PMI***:

NON-SMOOTHED6-MONTH MOVING AVERAGE

MANUFACTURING PMI*EMERGING MARKETS EXCLUDING CHINA**CHINA

* SOURCE: MARKIT.** EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 12 EMERGING ECONOMIES.*** AVERAGE OF NATIONAL BUREAU OF STATISTICS AND CAIXIN PMIs.

1800

1600

1400

1200

1000

800

600

400

1995 2000 2005 2010 2015

1800

1600

1400

1200

1000

800

600

400

PRECIOUS METALS INDEX IN US$*:

3-YEAR MOVING AVERAGE12-YEAR MOVING AVERAGE

* SOURCE: COMMODITY RESEARCH BUREAU Inc.

16001400

1200

1000

800

600

2012 2013 2014 2015 2016

16001400

1200

1000

800

600

24000

20000180001600014000

12000

10000

24000

20000180001600014000

12000

10000

120

100

80

60

40

120

100

80

60

40

5000

4000

3000

2500

2000

5000

4000

3000

2500

2000

COKE SPOT PRICE****RMB/T RMB/T

WHOLESALE PRICE OF RUBBER***RMB/Ton

RMB/Ton

IRON ORE PRICES**

US$/Ton

US$/Ton

CHINA:PRICE OF STEEL*

RMB/T RMB/T

* DOMESTIC HOT ROLLED STEEL SHEET AVERAGE SPOT PRICE; SOURCE: ANTAIKE INFORMATION DEVELOPMENT.** SOURCE: METAL BULLETIN.*** BEIJING DOMESTIC-MADE No.1 RUBBER.**** 2ND GRADE COKE SPOT PRICE TIANJIN; SOURCE: ANTAIKE INFORMATION DEVELOPMENT.




A major resistance

11



MARKET PROFILES

320

300

280

260

240

220

200

180

2010 2012 2014 2016

320

300

280

260

240

220

200

180

520

480

440

400

360

320

280

520

480

440

400

360

320

280

GLOBAL STOCK PRICES* IN SDR**

GLOBAL STOCK PRICES IN LOCALCURRENCY*:

200-DAY MOVING AVERAGE800-DAY MOVING AVERAGE

* SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).** SPECIAL DRAWING RIGHTS; SOURCE: IMF.

130

120

110

100

90

80

70

2012 2014 2016

130

120

110

100

90

80

70

U.S.:

RELATIVE TOTAL RETURN:S&P 500 RELATIVE-TO-U.S. 30-YEAR TREASURYS*

200-DAY MOVING AVERAGE400-DAY MOVING AVERAGE800-DAY MOVING AVERAGE

* REBASED TO 100 AT JANUARY 2011.

220

200

180

160

140

120

100

80

2008 2010 2012 2014 2016

220

200

180

160

140

120

100

80

RELATIVE TOTAL RETURN:EMERGING MARKETS STOCKS*-TO-U.S. 30-YEAR TREASURYS

200-DAY MOVING AVERAGE

* REBASED TO 100 AT JANUARY 2005; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).




New lows ahead

12



MARKET PROFILES

95

85

75

65

55

45

35

2006 2008 2010 2012 2014 2016

95

85

75

65

55

45

35

CHINA INVESTIBLE STOCK PRICESIN LOCAL CURRENCY*:


* SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).

120

115

110

105

100

95

90

85

2004 2006 2008 2010 2012 2014 2016

120

115

110

105

100

95

90

85

160

150

140

130

120

110

100

90

160

150

140

130

120

110

100

90

TELECOMMUNICATION


UTILITIES GLOBAL STOCK PRICESRELATIVE TO*:

* BOTH SERIES REBASED TO 100 AT JANUARY 2004; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).

180

160

140

120

100

2010 2012 2014 2016

180

160

140

120

100

240220200180

160

140

120

100

240220200180

160

140

120

100

220200

180

160

140

120

100

220200

180

160

140

120

100

180

160

140

120

100

180

160

140

120

100

S&P 500 TRUCKINGCOMPOSITE**

U.S. HIGH BETA:CONSUMER DISCRETIONARY*

U.S. HIGH BETA:INDUSTRIALS*


U.S. HIGH BETA:TECHNOLOGY*

NOTE: ALL SERIES RABASED TO 100 AT JANUARY 2010.* SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).** SOURCE: BLOOMBERG.




13



GLOBAL GROWTH-SENSITIVE EQUITY SEGMENTS

180

160

140

120

100

80

60

2008 2010 2012 2014 2016

180

160

140

120

100

80

60

200

180

160

140

120

100

80

200

180

160

140

120

100

80

180

160

140

120

100

80

60

180

160

140

120

100

80

60

GLOBAL MACHINERY STOCKS IN US$*

GLOBAL CHEMICALS STOCKS IN US$*

3-YEAR MOVING AVERAGE6-YEAR MOVING AVERAGE12-YEAR MOVING AVERAGE

GLOBAL AUTO STOCKS IN US$*


300

260

220

180

140

100

80

60

2002 2004 2006 2008 2010 2012 2014 2016

300

260

220

180

140

100

80

60

KOREAN STOCKS IN US$*



20

15

10

5

0

-5

-10

2012 2013 2014 2015 2016

20

15

10

5

0

-5

-10

GLOBAL INDUSTRIALS:EARNINGS PER SHARE*(IN LOCAL CURRENCY TERMS)

Ann%Chg

Ann%Chg

* CALCULATED AS STOCK PRICE DIVIDED BY P/E RATIO; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).




Contracting

14



EM SHARE PRICES IN U.S. DOLLARS: A LONG-TERM PERSPECTIVE

1200

1000

800

600

400

300

200

150

100

1990 1995 2000 2005 2010 2015

1200

1000

800

600

400

300

200

150

100

EMERGING MARKETS STOCK PRICES IN US$*6-YEAR MOVING AVERAGE**12-YEAR MOVING AVERAGE**24-YEAR MOVING AVERAGE**

* SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).** EXPONENTIAL MOVING AVERAGES ARE USED IN THIS CHART.

5.0

2.5

0

-2.5

-5.0

-7.5

-10.0

-12.5

-15.0

2012 2014 2016

5.0

2.5

0

-2.5

-5.0

-7.5

-10.0

-12.5

-15.0

24

23

22

21

20

19

18

17

24

23

22

21

20

19

18

17

COMPOSITE MOMENTUM INDICATOR**% %

EMERGING MARKETS CURRENCIESVERSUS U.S. DOLLAR*:


* NOTE: WISDOMTREE EMERGING MARKETS CURRENCY FUND.** INCLUDES 100-DAY, 200-DAY, 400-DAY RATES OF CHANGE; ANNUALIZED.

1100

1000

900

800

700

600

500

400

2012 2014 2016

1100

1000

900

800

700

600

500

400

14

13

12

11

10

9

8

7

14

13

12

11

10

9

8

7

CREDIT SPREAD*

BPs BPs

BOND YIELDS

CHINA: ONSHORE CORPORATE BONDS:1-YEAR BBB+5-YEAR BBB+

% %

* RELATIVE TO GOVERNMENT BOND YIELD WITH THE SAME DURATION.

Emerging cracks in the credit system?



Bear market intact

15



QE AND EM

7.4

7.2

7.0

6.8

6.6

6.4

6.2

6.0

5.8

5.6

5.4

1994 1996 1998 2000 2002 2004 2006

8

7

6

5

4

3

EMERGING MARKETS STOCKS IN US$* (LS)U.S. 10-YEAR GOVERNMENT BOND YIELD (RS)

(1993-2008)

%

* SHOWN AS A NATURAL LOGARITHM; SOURCE: MSIC Inc. (SEE COPYRIGHT DECLARATION).

4.3

4.2

4.1

4.0

2000 2002 2004 2006 2008

6.5

5.5

4.5

3.5

2.5

1.5

.5

EMERGING MARKETS EXCLUDING CHINA CURRENCY INDEX* (LS)

U.S. 2-YEAR TREASURY YIELD (RS)

(1999-2008)

%

* EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 18 EMERGING ECONOMIES; SHOWN AS A NATURAL LOGARITHM.

320

280

240

200

160

120

2010 2012 2014 2016

160

140

120

100

3000

2600

2200

1800

220

180

140

100

4000

3000

2500

2000

1500

1000

2006 2008 2010 2012 2014 2016

110

105

100

95

90

85

80

BANK OF JAPAN ASSETS**** (LS)EMERGING MARKETS SOVEREIGN

BONDS EXCESS RETURN***** (RS)

TnYEN

EUROPEAN CENTRAL BANK ASSETS** (LS)EM STOCK PRICES IN USD*** (RS)

BnEURO

FED TOTAL ASSETS (LS)EMERGING MARKETS

CURRENCIES* vs US$ (RS)

BnUS$

* EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 19 EMERGING ECONOMIES.** SOURCE: EUROPEAN CENTRAL BANK.*** SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).**** SOURCE: BANK OF JAPAN.***** REBASED TO 100 AT JANUARY 2009; SOURCE: BARCLAYS.

Nocorrelation

Nocorrelation

Nocorrelation

Positive correlation




16



EM CREDIT MARKETS ARE TOO COMPLACENT

120

110

100

90

80

70

60

2006 2008 2010 2012 2014 2016

110

100

90

80

120

100

80

60

2000 2002 2004 2006 2008 2010 2012 2014 2016

700

600

500

400

300

200

CORPORATE BOND EXCESS RETURN* (LS)EMERGING MARKETS EXCLUDING CHINA

CURRENCIES** vs. US$ (RS)

EMERGING MARKETS* SOVEREIGN BOND EXCESS RETURN (LS)

CONTINUOUS COMMODITY PRICE INDEX (RS)

* REBASED TO 100 AT JANUARY 2006; SOURCE: BARCLAYS.** EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 18 EMERGING ECONOMIES.

240

220

200

180

160

140

120

100

80

2010 2012 2014 2016

700

650

600

550

500

450

400

350

300

250

150

140

130

120

110

100

90

80

70

2014 2015 2016

400

380

360

340

320

300

280

260

240

220

400

380

360

340

320

300

280

260

240

220

9.6

9.4

9.2

9.0

CORPORATE SPREADS*:GLOBAL INDUSTRIALS (LS)EMERGING ASIA CORPORATE*** (RS)

BPs BPs

SOVEREIGN CDS (LS)OFF-SHORE CORPORATE AND

QUASI-SOVEREIGN SPREADS* (RS)

BPs BPs

CHINA:OFF-SHORE CORPORATE & QUASI-SOVEREIGN

SPREAD* (INVERTED; LS)H-SHARE PRICE

INDEX** (RS)

BPs

* SOURCE: BARCLAYS.** SHOWN AS A NATURAL LOGARITHM.*** CORPORATE & QUASI-SOVEREIGN SPREAD.

CHINA:

?

?

?


17



ASIAN STOCKS, COMMODITIES AND U.S. IMPORTS

600550500

450

400

350

300

250

200

150

1995 2000 2005 2010 2015

800

400

200

100

EMERGING ASIAN STOCK PRICES IN USD* (LS)BRENT OIL PRICE (RS)


25

20

15

10

5

0

-5

-10

-15

1990 1995 2000 2005 2010 2015

80

60

40

20

0

-20

-40

U.S. IMPORTS VOLUME* (LS)EMERGING MARKETS

STOCK PRICES** (RS)

Ann%Chg

Ann%Chg

* SHOWN AS A 3-MONTH MOVING AVERAGE.** SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).

Asian Boom and Bust

U.S. Tech capex

boom/tech

bubble

U.S. housing bubble

Credit/Asset markets-driven business cycles

A Historical Perspective On Asset/Credit Cycles

1990 1995 2000

1998

2001

2008/09

2005 2010 2015

China/EM credit excesses?

2017




18



EM: STEALTH LIQUIDITY INJECTIONS

40

30

20

10

0

-10

-20

-30

2006 2008 2010 2012 2014 2016

40

30

20

10

0

-10

-20

-30

50

40

30

20

10

0

-10

50

40

30

20

10

0

-10

40

30

20

10

0

-10

40

30

20

10

0

-10

MALAYSIA

Ann%Chg

Ann%Chg

INDONESIA**

Ann%Chg

Ann%Chg

FOREIGN EXCHANGE RESERVES (LS)NARROW MONEY (M1) GROWTH* (RS)

CHINA

Ann%Chg

Ann%Chg

* SHOWN AS A 3-MONTH MOVING AVERAGE.** FOREIGN EXCHANGE RESERVES IS NET OF GOLD HOLDINGS, COMMERCIAL BANKS' FOREIGN EXCHANGE DEPOSITS IN CENTRAL BANK, AND FX SWAPS.

30

25

20

15

10

5

0

-5

-10

2008 2010 2012 2014 2016

30

25

20

15

10

5

0

-5

-10

30

25

20

15

10

5

0

-5

30

25

20

15

10

5

0

-5

40

20

0

-20

-40

-60

40

20

0

-20

-40

-60

MEXICO

Ann%Chg

Ann%Chg

SOUTH AFRICA

Ann%Chg

Ann%Chg

TURKEY

FOREIGN EXCHANGE RESERVES (LS)NARROW MONEY (M1) GROWTH* (RS)

Ann%Chg

Ann%Chg



19



FISCAL BALANCES WILL WORSEN

1

0

-1

-2

-3

2000 2002 2004 2006 2008 2010 2012 2014 2016

1

0

-1

-2

-3

0

-2.5

-5.0

-7.5

0

-2.5

-5.0

-7.5

1

0

-1

-2

-3

-4

-5

1

0

-1

-2

-3

-4

-5

0

-2.5

-5.0

-7.5

-10.0

-12.5

-15.0

0

-2.5

-5.0

-7.5

-10.0

-12.5

-15.0

INDONESIA% ofGDP

% ofGDP

MALAYSIA% ofGDP

% ofGDP

SOUTH AFRICA

% ofGDP

% ofGDP

TURKEY

FISCAL BALANCE:

% ofGDP

% ofGDP

7.5

5.0

2.5

0

-2.5

-5.0

-7.5

2000 2002 2004 2006 2008 2010 2012 2014 2016

7.5

5.0

2.5

0

-2.5

-5.0

-7.5

0

-1

-2

-3

-4

-5

0

-1

-2

-3

-4

-5

0

-1

-2

-3

0

-1

-2

-3

0

-2.5

-5.0

-7.5

-10.0

0

-2.5

-5.0

-7.5

-10.0

RUSSIA% ofGDP

% ofGDP

COLOMBIA

% ofGDP

% ofGDP

MEXICO

% ofGDP

% ofGDP

FISCAL BALANCE:

BRAZIL

% ofGDP

% ofGDP


20



TRADE BALANCES ARE WEAK

200

150

100

50

2000 2002 2004 2006 2008 2010 2012 2014 2016

200

150

100

50

0

-6

-12

-18

0

-6

-12

-18

0

-10

-20

-30

0

-10

-20

-30

40

20

0

-20

-40

-60

-80

-100

40

20

0

-20

-40

-60

-80

-100

RUSSIA

BnUS$

BnUS$

COLOMBIA

CURRENT ACCOUNT BALANCETRADE BALANCE

BnUS$

BnUS$

MEXICOBnUS$

BnUS$

BRAZILBn

US$BnUS$

NOTE: ALL SERIES ARE SHOWN AS A 12-MONTH MOVING TOTAL.

30

10

-10

-30

2000 2002 2004 2006 2008 2010 2012 2014 2016

30

10

-10

-30

40

30

20

10

0

40

30

20

10

0

5

0

-5

-10

-15

-20

5

0

-5

-10

-15

-20

0

-25

-50

-75

-100

0

-25

-50

-75

-100

INDONESIA

BnUS$

BnUS$

MALAYSIA

CURRENT ACCOUNT BALANCETRADE BALANCEBn

US$BnUS$

SOUTH AFRICABn

US$BnUS$

TURKEYBn

US$BnUS$

NOTE: ALL SERIES ARE SHOWN AS A 12-MONTH MOVING TOTAL.


21



HIGH PRIVATE DEBT LEVELS AND SERVICE COSTS

150

125

100

2000 2005 2010 2015

40

35

30

25

TOTAL CREDIT TO PRIVATE NON-FINANCIALSECTOR AS A % OF GDP

% ofGDP

% ofGDP

* SOURCE: BIS.

80

60

40

20

2000 2005 2010 2015

80

60

40

20

TOTAL CREDIT TO PRIVATENON-FINANCIAL SECTOR AS A % OF GDP:

% ofGDP

% ofGDP

* SOURCE: BIS.

20

15

10

5

2005 2010 2015

20

15

10

5

PRIVATE NON-FINANCIALSECTOR DEBT SERVICE RATIO*:

% %

* SOURCE: BIS.

12.5

10.0

7.5

5.0

2005 2010 2015

12.5

10.0

7.5

5.0

PRIVATE NON-FINANCIALSECTOR DEBT SERVICE RATIO*:

% %

* SOURCE: BIS.





Indonesia (RS)

Malaysia (LS)

Thailand (LS)

138%

40%

123%

RussiaBrazil

India

South Africa

Turkey

IndiaSouth Africa

Indonesia

Turkey

Russia

Brazil

Malaysia

Thailand

22



EM CREDIT IS STILL STRONG

35

30

25

20

15

10

5

2004 2006 2008 2010 2012 2014 2016

35

30

25

20

15

10

5

35

30

25

20

15

10

5

35

30

25

20

15

10

5

CHINA:BANK AND NON-BANK CREDIT**NOMINAL GDP

Ann%Chg

Ann%Chg

EMERGING MARKETS EXCLUDING CHINA,KOREA AND TAIWAN*:

PRIVATE CREDITNOMINAL GDP

Ann%Chg

Ann%Chg

* EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 16 EMERGING ECONOMIES.** NON-BANK LOANS = CUMULATIVE SOCIAL FINANCING EXCLUDING BANK LOANS AND EQUITY FINANCING.


Corporate Debt Burden

COUNTRY TOTAL CREDIT* TO NON-FINANCIAL CORPORATIONS AS A % OF GDP

CHINA 166%

CANADA 112%

KOREA 106%

JAPAN 102%

HUNGARY 87%

AUSTRALIA 83%

U.S. 71%

MALAYSIA 68%

RUSSIA 60%

TURKEY 59%

CZECH REPUBLIC 57%

GERMANY 54%

THAILAND 52%

BRAZIL 50%

INDIA 50%

POLAND 47%

SOUTH AFRICA 36%

MEXICO 25%

INDONESIA 24%

ARGENTINA 12%

* AS OF Q3 2015; SOURCE: BIS

External (Foreign Currency) Debt Of Companies And Banks

COUNTRY EXTERNAL CREDIT* TO COMPANIES AND BANKS AS A % OF GDP

CHILE 36.8%

MALAYSIA 35.1%

SOUTH AFRICA 28.9%

BRAZIL 28.1%

TURKEY 25.1%

RUSSIA 23.9%

PERU 19.5%

MEXICO 19.3%

KOREA 19.2%

THAILAND 19.0%

COLOMBIA 18.7%

TAIWAN 17.0%

PHILIPPINES 13.8%

INDIA 12.1%

INDONESIA 11.8%

CHINA 9.7%

* AS OF Q4 2015; SOURCE: BIS

12.5%

7.1%

23



EM DOMESTIC BOND YIELDS HAVE BROKEN OUT

5.5

5.0

4.5

4.0

3.5

3.0

2008 2010 2012 2014 2016

5.5

5.0

4.5

4.0

3.5

3.0

20

18

16

14

12

10

8

6

20

18

16

14

12

10

8

6

11

10

9

8

7

11

10

9

8

7

22

18

14

10

6

22

18

14

10

6

MALAYSIA: 5-YEAR SWAP RATE

% %

INDONESIA:10-YEAR GOVERNMENT BOND YIELD

% %

SOUTH AFRICA:15-YEAR GOVERNMENT BOND YIELD

6-YEAR MOVING AVERAGE

% %

TURKEY:5-YEAR GOVERNMENT BOND YIELD

% %

7

6

5

4

2011 2012 2013 2014 2015 2016

7

6

5

4

7

6

5

4

7

6

5

4

9

8

7

6

5

9

8

7

6

5

22

20

18

16

14

12

10

8

22

20

18

16

14

12

10

8

MEXICO: 5-YEAR

% %

DOMESTIC GOVERNMENT BOND YIELD:6-YEAR MOVING AVERAGE

PERU: 5-YEAR

% %

COLOMBIA: 5-YEAR

% %

BRAZIL:3-YEAR GOVERNMENT BOND YIELD

% %


24



LOAN-TO-DEPOSIT RATIOS HAVE RISEN A LOT

94

92

90

88

86

84

82

80

2004 2006 2008 2010 2012 2014 2016

94

92

90

88

86

84

82

80

100

90

80

70

60

100

90

80

70

60

90

85

80

75

120

100

80

60

40

150

100

50

150

100

50

SOUTH AFRICA% %

INDONESIA:LOCAL CURRENCYFOREIGN CURRENCY

% %

MALAYSIA:LOCAL CURRENCY (LS)FOREIGN CURRENCY (RS)

% %

LOAN-TO-DEPOSIT RATIO:TURKEY:

LOCAL CURRENCYFOREIGN CURRENCY

% %

120

110

100

2004 2006 2008 2010 2012 2014 2016

120

110

100

160

150

140

130

120

160

150

140

130

120

123

122

121

120

119

118

117

123

122

121

120

119

118

117

THAILAND

% %

RUSSIA

% %

LOAN-TO-DEPOSIT RATIO:BRAZIL

% %


115%

110%

115%

150%

100%

90%

100%

25



EM BANKS HAVE NOT PROVISIONED FOR IMPAIRED ASSETS

8

6

4

2

2004 2006 2008 2010 2012 2014 2016

8

6

4

2

12

10

8

6

4

12

10

8

6

4

8

6

4

2

8

6

4

2

12

10

8

6

4

2

12

10

8

6

4

2

INDONESIA

% %

THAILAND% %

INDIA

% %

CHINA

AS A % OF TOTAL BANK LOANS*:NON-PERFORMING LOANSPROVISIONS

% %

* SOURCE: NATIONAL SOURCES.

8

6

4

2

2004 2006 2008 2010 2012 2014 2016

8

6

4

2

6

5

4

3

2

6

5

4

3

2

10.0

7.5

5.0

2.5

10.0

7.5

5.0

2.5

8

7

6

5

4

8

7

6

5

4

MALAYSIA

% %

TURKEY

% %

AS A % OF TOTAL BANK LOANS*:NON-PERFORMING LOANSPROVISIONS

RUSSIA

% %

BRAZIL% %

* SOURCE: NATIONAL SOURCES.


26



LOW AND FALLING EM RETURN ON CAPTIAL WILL CONTINUE SUPPRESSING CAPEX

16

14

12

10

8

2000 2002 2004 2006 2008 2010 2012 2014 2016

16

14

12

10

8

EMERGING MARKETS:RETURN ON CAPITAL FOR NON-FINANCIALS*PRIME LENDING RATE**

% %

* EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 9 EM SECTORS; SOURCE: BLOOMBERG.** EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 17 EMERGING ECONOMIES.

80

40

0

-40

2004 2006 2008 2010 2012 2014 2016

80

40

0

-40

1.2

.8

.4

.2

.1

1.2

.8

.4

.2

.1

NET PORTFOLIO INFLOW (QUARTERLY)US$Bn

US$Bn

EMERGING MARKETS EXCLUDING CHINAAND KOREA AND TAIWAN:

CUMULATIVE NET PORTFOLIO INFLOW*

US$Tn

US$Tn

* CUMULATE FROM JANUARY 2004. NOTE: BCA CALCULATION USING BALANCE OF PAYMENT DATA.

200

150

100

50

2004 2006 2008 2010 2012 2014 2016

16

14

12

10

8

EM EX-CHINA NET FDI INFLOWS* (LS)EM RETURN ON CAPITAL** (RS)

BnUS$

%

* INCLUDES 17 EMERGING ECONOMIES; BCA CALCULATION USING NATIONAL SOURCES; SHOWN AS A 4-QUARTER MOVING TOTAL.** EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 9 EM SECTORS EXCLUDING FINANCIALS; SOURCE: BLOOMBERG.




Return on capital has fallen to the level of borrowing costs

27



10.0 9.0 8.0 7.0 6.0

5.0

4.0

3.0

2.0

1.5

1.0

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

10.0 9.0 8.0 7.0 6.0

5.0

4.0

3.0

2.0

1.5

1.0

PRICES IN REAL TERMS:GOLD NIKKEI 225 NASDAQ IRON ORE*

* CHINA (TIANJIN PORT) IMPORT IRON ORE PRICE. NOTE: All SERIES REBASED TO 1 AT BEGINNING OF DECADE.

350

300

250

200

150

100

1990 1995 2000 2005 2010 2015

350

300

250

200

150

100

EMERGING MARKETS STOCKSvs DEVELOPED WORLD*:


IN US$ TERMS

* SERIES REBASED TO JANUARY 1989 AT 100; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).

8000

7000

6000

5000

4000

3000

2000

1000

1990 1995 2000 2005 2010 2015

8000

7000

6000

5000

4000

3000

2000

1000

EMERGING MARKETS STOCKS vsDEVELOPED WORLD*:


IN LOCAL CURRENCY TERMS

* SERIES REBASED TO JANUARY 1989 AT 100; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).



STRUCTURAL BREAKDOWN IN COMMODITIES AND EM RELATIVE PERFORMANCE

Structural breakdown

28



COMMODITY PLAYS STILL AT RISK

140120

100

80

60

40

20

1980 1985 1990 1995 2000 2005 2010 2015

140120

100

80

60

40

20

BRENT OIL PRICES*3-YEAR MOVING AVERAGE6-YEAR MOVING AVERAGE12-YEAR MOVING AVERAGE

US$/Bbl

US$/Bbl

* SOURCE: LONDON BRENT CRUDE OIL INDEX.

500

450

400

350

300

250

200

150

100

2006 2008 2010 2012 2014 2016

500

450

400

350

300

250

200

150

100

COPPER PRICE IN US$12-YEAR MOVING AVERAGE24-YEAR MOVING AVERAGE

CENTS/POUND

CENTS/POUND

2.6

2.4

2.2

2.0

1.8

1.6

1.4

60 65 70 75 80 85 90 95 2000 05 10 15

2.6

2.4

2.2

2.0

1.8

1.6

1.4

3.4

3.2

3.0

2.8

2.6

2.4

2.2

2.0

3.4

3.2

3.0

2.8

2.6

2.4

2.2

2.0

2.2

2.0

1.8

1.6

1.4

1.2

1.0

.8

.6

.4

.2

2.2

2.0

1.8

1.6

1.4

1.2

1.0

.8

.6

.4

.2

S&P MACHINERY / S&P 500TREND+/- TWO STANDARD DEVIATIONS

S&P ENERGY / S&P 500TREND+/- TWO STANDARD DEVIATIONS

S&P MATERIALS / S&P 500TREND+/- TWO STANDARD DEVIATIONS




New lows ahead

29



BANKS AND COMMODITY PRODUCING COUNTRIES ARE VULNERABLE

400

300

200

150

100

2000 2002 2004 2006 2008 2010 2012 2014 2016

600

500

400

300

200

150

100

16001200

800

400

200

100

300

200

150

100

16001200

800

400

200

100

800

600

400

200

100

SOUTH AFRICAN BANK STOCKS** (LS)PLATINUM PRICES IN USD (RS)

INDONESIAN BANK STOCKS** (LS)LMEX INDEX IN USD*** (RS)

PERUVIAN BANK STOCKS* (LS)PRECIOUS METALS PRICES IN USD (RS)

* CREDITCORP STOCK PRICE AS A PROXY.** IN LOCAL CURRENCY TERMS; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).*** SOURCE: LONDON METAL EXCHANGE.

600

400

200

100

1990 1995 2000 2005 2010 2015

300

250

200

150

100

EMERGING MARKETS STOCK PRICES* (LS)INDUSTRIAL METALS PRICES** (RS)

* IN USD TERMS; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).** SOURCE: LONDON LMEX EXCHANGE INDEX. NOTE: BOTH SERIES ARE IN US$; REBASED TO 100 AT JANUARY 1990.

60

40

20

0

-20

-40

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

15

10

5

0

-5

-10

-15

-20

COMMODITY PRICES* (ADVANCED BY 6-MONTH, LS)

CHANGE IN DOMESTIC CREDIT GROWTH RATE IN COMMODITY COUNTRIES** (RS)

Ann%Chg

%

* SHOWN AS A 6-MONTH MOVING AVERAGE; SOURCE: S&P GOLDMAN SACHS COMMODITY INDEX.** EQUALLY-WEIGHTED AVERAGE OF BRAZIL, CHILE, COLOMBIA, MEXICO, SOUTH AFRICA, AND RUSSIA; SOURCE: IMF.



30



U.S. DOLLAR WILL APPRECIATE VERSUS EM CURRENCIES

170

160

150

140

130

120

110

100

2002 2004 2006 2008 2010 2012 2014 2016

170

160

150

140

130

120

110

100

TOTAL RETURN:EMERGING MARKETS EXCLUDING CHINACURRENCIES* vs US$

* EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 20 EM ECONOMIES.

140130120110100

90

80

70

1975 1980 1985 1990 1995 2000 2005 2010 2015

140130120110100

90

80

70

120100

80

60

40

120100

80

60

40

NARROW MEASURE BASED ONMAJOR CURRENCIES**

TRADE WEIGHTED U.S. DOLLAR INDEX6-YEAR MOVING AVERAGE12-YEAR MOVING AVERAGE

BROAD MEASURE*

NOTE: SHADING DENOTES BROAD USD BEAR MARKETS. SOURCE: FEDERAL RESERVE.* INCLUDES 19 EM AND 7 DEVELOPED COUNTRIES.** INCLUDES 7 DEVELOPED COUNTRIES.

120

115

110

105

100

95

2002 2004 2006 2008 2010 2012 2014 2016

120

115

110

105

100

95

EMERGING ASIAN CURRENCIES* vs US$

* TRADE AND LIQUIDITY WEIGHTED ASIAN CURRENCIES; SOURCE: BLOOMBERG J.P. MORGAN ASIAN CURRENCY INDEX (ADXY).



Bear market

Break down

31



U.S. DOLLAR: MORE UPSIDE

4.0

3.5

3.0

2.5

2.0

1995 2000 2005 2010 2015

115

110

105

100

95

EMERGING MARKETS EXCLUDING CHINA:PRODUCTIVITY GROWTH* (LS)REAL EFFECTIVE EXCHANGE RATE** (RS)

Ann%Chg

* EQUITY MARKET-CAP WEIGHTED AGGREGATE OF 18 EMERGING ECONOMIES.** EQUITY MARKET-CAP WEIGHTED OF 19 COUNTRIES; AVERAGE OF PPI AND CPI BASED.

140

120

100

80

1985 1990 1995 2000 2005 2010 2015

140

120

100

80

110

100

90

80

110

100

90

80

160

140

120

100

160

140

120

100

JAPAN

EURO AREA

REAL EFFECTIVE EXCHANGE RATE(BASED ON UNIT LABOR COST)*

U.S.

* SOURCE: IMF INTERNATIONAL FINANCIAL STATISTICS.

6

4

2

0

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

6

4

2

0

CHINA:TOTAL FACTOR PRODUCTIVITY GROWTH*

% %

* SOURCE: OECD ECONOMIC SURVEYS: CHINA 2015.




Not expensive

32



200

175

150

125

2006 2008 2010 2012 2014 2016

200

175

150

125

16

12

8

6

4

2

16

12

8

6

4

2

AS A % OF GDP% OfGDP

% OfGDP

CHINA:CORPORATE ANDHOUSEHOLD DEBT*

TnUS$

TnUS$

* CUMULATIVE TOTAL SOCIAL FINANCING EXCLUDING EQUITY ISSUANCE BY NON-FINANCIAL CORPORATIONS PLUS NON-BANK INTERNATIONAL DEBT SECURITIES AND FOREIGN BANK CLAIMS ON NON-BANK CORPORATE SECTOR.

100

90

80

2008 2010 2012 2014 2016

100

90

80

EMERGING MARKETS EXCLUDING CHINA:CORPORATE AND HOUSEHOLD DEBT*AS A % OF GDP

% ofGDP

% ofGDP

* INCLUDES 15 EMERGING ECONOMIES; SOURCE: BIS AND IMF.

160

140

120

100

80

60

40

1985 1990 1995 2000 2005 2010 2015

160

140

120

100

80

60

40

CORPORATE DEBT*-TO-GDP RATIO

% ofGDP

% ofGDP

* SOURCE: BIS; BCA CALCULATIONS.

20.0

17.5

15.0

12.5

2000 2002 2004 2006 2008 2010 2012 2014 2016

20.0

17.5

15.0

12.5

PRIVATE NON-FINANCIAL SECTORDEBT-SERVICE RATIO*:

% %

* CALCULATED AS INTEREST PAYMENTS PLUS AMORTIZATION TO INCOME RATIO; SOURCE: BIS.




CHINA’S LEVERAGE AND DEBT SERVICE RATIO


US$17 tn

$23 tn

20%

90 percentage points of GDP

China

Japan

Korea

U.S.

Thailand

China

U.S.

33



CHINA

36

32

28

24

20

16

12

8

2004 2006 2008 2010 2012 2014 2016

36

32

28

24

20

16

12

8

CHINADOMESTIC CREDIT (BANK PLUS NON-BANK)*NOMINAL GDP

Ann%Chg

Ann%Chg

* CUMULATIVE AGGREGATE FINANCING EXCLUDING EQUITY FINANCING.

40

30

20

10

2004 2006 2008 2010 2012 2014 2016

40

30

20

10

16

8

4

2

1

16

8

4

2

1

AS % OF NOMINAL GDP

% OfGDP

% OfGDP

ANNUAL DOMESTIC CREDIT ORIGINATION*CENTRAL GOVERNMENT SPENDINGLOCAL GOVERNMENT SPENDING

LEVEL

TnRMB

TnRMB

* TOTAL SOCIAL FINANCING MINUS EQUITY FINANCING.

25

20

15

10

5

0

-5

2008 2010 2012 2014 2016

36

32

28

24

20

16

12

CHINA:IMPORT VOLUME* (LS)BANK LOANS PLUS NON-BANK CREDIT**

(ADVANCED BY 6 MONTHS; RS)

Ann%Chg

Ann%Chg

* ADJUSTED FOR WORKING DAYS; SHOWN AS A 12-MONTH MOVING AVERAGE.** NON-BANK LOANS = CUMULATIVE SOCIAL FINANCING EXCLUDING BANK LOANS AND EQUITY FINANCING.


12.5%

7.1%

15 Tn

2.5 Tn



34



CHINA

4.4

4.0

3.6

3.2

2.8

2.4

2.0

1.6

1985 1990 1995 2000 2005 2010 2015

4.4

4.0

3.6

3.2

2.8

2.4

2.0

1.6

.6

.5

.4

.3

.6

.5

.4

.3

INCREMENTAL CAPITAL-OUTPUT RATIO(ICOR)**

CHINA:OUTPUT-TO-CAPITAL RATIO*

*ANNUAL CHANGES IN REAL GDP AVERAGED OVER 3 YEARS DIVIDED BYANNUAL CHANGES IN REAL CAPITAL SPENDING AVERAGED OVER 3 YEARS**ANNUAL CHANGES IN REAL CAPITAL SPENDING AVERAGED OVER 3 YEARSDIVIDED BY ANNUAL CHANGES IN REAL GDP AVERAGED OVER 3 YEARS

6

4

2

0

1986 1990 1994 1998

6

4

2

0

10

5

0

10

5

0

1000

900

800

700

40000

35000

30000

25000

20000

15000

REAL PERSONAL CONSUMPTIONEXPENDITURE

Ann%Chg

Ann%Chg

TOTAL BANK LOANS

Ann%Chg

Ann%Chg

LAND PRICES* (LS)NIKKEI STOCK PRICE INDEX (RS)

JAPAN(1985-1999)

* REBASED TO 100 AT JANUARY 1967.


Little output growth per unit of capex

China’s investment efficiency has collapsed


Bubble peak

No contraction till 1997 - 1998

35



CHINESE SURVEYS ARE WEAK

55

50

45

40

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

55

50

45

40

60

55

50

45

40

60

55

50

45

40

OVERSEAS ORDERS

CHINA 5000 INDUSTRIAL ENTERPRISES SURVEY*:

DOMESTIC ORDERS

* SOURCE: PBoC.

60

55

50

45

40

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

60

55

50

45

40

70

65

60

55

50

45

70

65

60

55

50

45

PROFITABILITY

CHINA 5000 INDUSTRIAL ENTERPRISES SURVEY*:

GENERAL BUSINESS CONDITIONS

* SOURCE: PBoC.


Collapsed

36



60

40

20

0

-20

2006 2008 2010 2012 2014 2016

60

40

20

0

-20

80

40

0

-40

80

40

0

-40

40

0

-40

40

0

-40

40

20

0

-20

-40

40

20

0

-20

-40

100

50

0

100

50

0

50

25

0

-25

50

25

0

-25

CONSUMER STAPLESAnn%

ChgAnn%Chg

CONSUMER DISCRETIONARY

Ann%Chg

Ann%Chg

UTILITIESAnn%Chg

Ann%Chg

ENERGYAnn%

ChgAnn%Chg

FINANCIAL INCLUDING BANKSBANKS

Ann%Chg

Ann%Chg

CHINESE MAINLAND LISTED COMPANIES:

OVERALL**

EARNINGS PER SHARE*

Ann%Chg

Ann%Chg

* CALCULATED AS STOCK PRICES DIVIDED BY P/E RATIO; SHOWN AS A 3-MONTH MOVING AVERAGE; TRUNCATED AT ¯50 AND 100; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).** AVERAGE OF IBES AND MSCI DATA.

80

40

0

-402006 2008 2010 2012 2014 2016

80

40

0

-40

80

40

0

-40

80

40

0

-40

100

50

0

-50

100

50

0

-50

100

50

0

-50

100

50

0

-50

100

50

0

-50

100

50

0

-50

HEALTH CAREAnn%

ChgAnn%Chg

TELECOMMUNICATIONAnn%

ChgAnn%Chg

TECHNOLOGYAnn%

ChgAnn%Chg

INDUSTRIALSAnn%

ChgAnn%Chg

CHINESE MAINLAND LISTED COMPANIES:

MATERIALS

EARNINGS PER SHARE*

Ann%Chg

Ann%Chg

* CALCULATED AS STOCK PRICES DIVIDED BY P/E RATIO; SHOWN AS A 3-MONTH MOVING AVERAGE; TRUNCATED AT ¯50 AND 100; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).


CHINA CORPORATE PROFITS (EPS)

37



100

90

80

1995 2000 2005 2010 2015

100

90

80

110

100

90

80

70

110

100

90

80

70

110

100

90

110

100

90

130

110

90

70

130

110

90

70

100 90

80

70

60

50

100 90

80

70

60

50

CHILE

COLOMBIA

PERU

REAL EFFECTIVE EXCHANGE RATE*MEAN+/- ONE STANDARD DEVIATION+/- TWO STANDARD DEVIATION

MEXICO

BRAZIL

* AVERAGE OF CPI BASED AND PPI BASED REAL EFFECTIVE EXCHANGE RATES; SOURCE: J.P. MORGAN CHASE & CO.


LATIN AMERICAN REAL EFFECTIVE EXCHANGE RATES

MEAN

MEAN

MEAN

MEAN

MEAN

38



BRAZIL: PRICED FOR POLITICAL PERFECTION

250

500

1000

2000

3000

4000

1975 1980 1985 1990 1995 2000 2005 2010 2015

250

500

1000

2000

3000

4000BRAZIL:STOCK PRICES* IN US$

200-WEEK MOVING AVERAGE800-WEEK MOVING AVERAGE



1990-1997

2003-2010

Brazil: Possible Political Scenarios And Their Impact On MarketsPO

LITI

CA

L SC

ENA

RIO

S


POLI

TIC

AL

SCEN

AR

IOS

IMPEACHMENT

STATUS QUOREMAINS

NEW ELECTION

PRESIDENT SURVIVES

IMPEACHMENT

PRESIDENT REPLACED BY VICE PRESIDENT MICHEL

TEMER (PMDB)

PRESIDENT`S RESIGNATION

SPIRAL OF SOCIAL UNREST AND TENSIONS

PRESIDENT REPLACED BY NEW MARKET-FRIENDLY ADMINISTRATION

MARKET NEGATIVE: INVESTORS LOSE

CONFIDENCE

MARKET NEGATIVE: CONGRESSIONAL

GRIDLOCK REMAINS UNTIL 2018

MARKET NEGATIVE: PENDING

RESOLUTION

MARKET POSITIVE: GENUINE

POLITICAL CHANGE

We are here

39



BRAZIL

-2

0

2

4

6

8

2004 2006 2008 2010 2012 2014 2016 2018

3

4

5

6

7

8

30

25

20

15

10

5

0

-5

-10

-15

30

25

20

15

10

5

0

-5

-10

-15

REAL GDP GROWTH (LS)CONSUMER PRICE INFLATION (RS)Ann%

ChgAnn%Chg

BRAZIL:CAPITAL SPENDINGIN REAL TERMS

Ann%Chg

Ann%Chg

Stagflation


3000

2500

2000

1500

1000

500

0

1995 2000 2005 2010 2015

3000

2500

2000

1500

1000

500

0

700

650

600

550

500

450

400

700

650

600

550

500

450

400

14

12

10

8

6

4

2

0

-2

-4

1900 1920 1940 1960 1980 2000 2020

14

12

10

8

6

4

2

0

-2

-4

SOVEREIGN SPREADS**BPs BPs

REAL GDP (LEVEL)

BRAZIL:REAL GDP GROWTH*

Ann%Chg

Ann%Chg

* SOURCE: IPEADATA, IBGE AND BCA CALCULATIONS.** OPTION ADJUSTED SPREAD; SOURCE: BARCLAYS.

Already fell by 5.6%

Fell by 1.4%

Fell by 0.5%Fell

by 1%


One of the worst recessions in 115 years

-17%

40



20

15

10

5

0

-5

-10

1995 2000 2005 2010 2015

20

15

10

5

0

-5

-10

GROSS NATIONAL SAVINGS RATE(AS A % OF GDP)

PRIVATE SECTORPUBLIC SECTORTOTAL

%ofGDP

%ofGDP

18

16

14

12

10

8

6

4

2005 2010 2015

18

16

14

12

10

8

6

4

3-YEAR GOVERNMENT BOND YIELD (LS)

NOMINAL GDP (RS)

% Ann%Chg

150

100

50

0

-50

2002 2004 2006 2008 2010 2012 2014 2016

150

100

50

0

-50

120

100

80

60

40

20

0

-20

-40

-60

120

100

80

60

40

20

0

-20

-40

-60

100

90

80

70

60

50

40

30

20

10

100

90

80

70

60

50

40

30

20

10

NET OTHER INVESTMENTUS$

BnUS$Bn

NET PORTFOLIO INVESTMENTUS$Bn

US$Bn

12-MONTH MOVING TOTAL3-MONTH ANNUALIZED*

BRAZIL:NET FDI

US$Bn

US$Bn

* CALCULATED AS FOUR TIMES 3-MONTH MOVING TOTAL.

BRAZIL


Not bad


Government dissaving is to blame

Toxic debt dynamics

41



BRAZIL

15

10

5

0

1995 2000 2005 2010 2015

15

10

5

0

10

9

8

7

6

5

4

10

9

8

7

6

5

4

-10

-8

-6

-4

-2

0

2

4

6

-10

-8

-6

-4

-2

0

2

4

6

GOVERNMENT EXPENDITURES*(IN REAL TERMS**)

Ann%Chg

Ann%Chg

INTEREST PAYMENTS ON THE PUBLIC DEBTAS A % OF GDP

% ofGDP

% ofGDP

BRAZIL: BUDGET BALANCE AS A % OF GDPNOMINALPRIMARY

%ofGDP

%ofGDP

* SHOWN AS A 12-MONTH MOVING AVERAGE; EXCLUDES SOCIAL SECURITY TRANSFERS.** DEFLATED BY CORE TRIMMED-MEAN CPI.

40

50

60

70

80

90

100

110

2000 2005 2010 2015 2020

40

50

60

70

80

90

100

110BRAZIL:GROSS GOVERNMENT DEBT*(AS A % OF GDP)

BEST CASE PROJECTIONBASE CASE PROJECTIONWORST CASE PROJECTION

%ofGDP

%ofGDP

*SOURCE: BANCO CENTRAL DO BRASILNOTE: SCENARIOS ARE BCA's CALCULATIONS BASED ON TABLE 1

25

20

15

10

5

0

-5

2005 2010 2015

25

20

15

10

5

0

-5

BRAZIL*:GOVERNMENT REVENUEGOVERNMENT EXPENDITURE**

Ann%Chg

Ann%Chg

* SHOWN AS A 12-MONTH MOVING AVERAGE.** EXCLUDES SOCIAL SECURITY TRANSFERS.



-10%

7.8%

109%

97%

86%

42



BRAZIL

22

24

26

2000 2005 2010 2015

22

24

26

14

16

18

14

16

18

80

60

40

20

0

80

60

40

20

0

2

0

-2

-4

-6

-8

20

0

-20

-40

-60

-80

-100

FEDERAL GOVERNMENT EXPENDITURESAS A % OF GDP

% %

GROSS NATIONAL SAVINGS RATE**%of

GDP%ofGDP

CURRENT ACCOUNT DEFICITNET FOREIGN DIRECT INVESTMENT*

BnUSD

BnUSD

BRAZIL:

CURRENT ACCOUNT BALANCE:AS A % OF GDP (LS)LEVEL (RS)

%ofGDP

BnUS$

* SHOWN AS A 12-MONTH MOVING TOTAL.** SHOWN AS 4-QUARTER MOVING AVERAGE.

8

10

12

14

16

18

2000 2005 2010 2015

8

10

12

14

16

18

40

50

60

70

80

40

50

60

70

80

CORPORATE FOREIGN DEBT

%ofGDP

%ofGDP

BRAZIL*:PRIVATE SECTORTOTAL DEBT

%ofGDP

%ofGDP

* SOURCE: BIS AND IMF; BCA CALCULATIONS.

3

4

5

6

7

8

1995 2000 2005 2010 2015

3

4

5

6

7

8BRAZILIAN BANKS*:TOTAL FOREIGN DEBT*OUTSTANDING AS A % OF GDP

%ofGDP

%ofGDP

* SOURCE: BIS.



Up by 50 percentage

points of GDP in 10 years

?

43



BRAZIL

5.0

7.5

10.0

12.5

2006 2008 2010 2012 2014

5.0

7.5

10.0

12.5

16

18

20

22

16

18

20

22

WAGE COMMITMENTS TO:INTEREST PAYMENTSPRINCIPAL PAYMENTS

% %

BRAZILIAN CONSUMERS*:DEBT SERVICE LOAD

% %

* SOURCE: BANCO CENTRAL DO BRASIL.

1.21.0

.8

.6

.4

2006 2008 2010 2012 2014

1.21.0

.8

.6

.4

10

20

30

40

50

10

20

30

40

50

MORTGAGES OUTSTANDING*

Mn Mn

BRAZILIAN HOUSEHOLD DEBTAS A % OF DISPOSABLE INCOME*

TOTALMORTAGES

% %


40

30

20

10

0

2008 2010 2012 2014

40

30

20

10

0

2824201612 8 4 0-4

2824201612 8 4 0-4

RIO DE JANEIRO**:APARTMENT PRICESAPARTMENT RENT

Ann%Chg

Ann%Chg

SAO PAULO:APARTMENT PRICESAPARTMENT RENT

Ann%Chg

Ann%Chg

SOURCE: FIPEZAP

-2

0

2

4

2005 2010 2015

-2

0

2

4

12

8

4

0

-4

12

8

4

0

-4

TOTAL EMPLOYMENT***Ann%Chg

Ann%Chg

WAGES*:IN NOMINAL TERMSIN REAL TERMS**

Ann%Chg

Ann%Chg

* SHOWN AS 6 3-MONTH MOVING AVERAGE.** DEFLATED BY CPI.*** SOURCE: BANCO CENTRAL DO BRASIL; SHOWN AS A 3-MONTH MOVING AVERAGE.



Up 4-fold

22%

Contracting

Contracting

44



32

28

24

20

2004 2006 2008 2010 2012 2014 2016

32

28

24

20

20

16

12

8

20

16

12

8

DEMAND, TIME ANDSAVINGS DEPOSITS*

% %

BRAZILIAN BANKS:AS A SHARE OF TOTAL LIABILITIES:INTERBANK, DEBENTURES,COMMERCIAL PAPER ANDMONEY MARKETS*

% %


30

20

10

0

2005 2010 2015

30

20

10

0

30

20

10

30

20

10

40

50

60

40

50

60

TOTAL DEPOSITSAnn%

ChgAnn%Chg

PUBLIC DIRECTED CREDITFREE-MARKET CREDIT*Ann%

ChgAnn%Chg

CREDIT AS A % OF TOTAL:PRIVATE BANKSPUBLIC BANKS

% %

* INCLUDES ALL NON-DIRECTED CREDIT BY BOTH PRIVATE AND PUBLIC BANKS.

10

9

8

7

6

5

4

3

2

2002 2004 2006 2008 2010 2012 2014 2016

10

9

8

7

6

5

4

3

2

BRAZILIAN PUBLIC BANKS*AS A SHARE OF TOTAL LOANS:

PROVISIONSNON-PERFORMING LOANS

% %


Only 4.5%

Less than 20%

BRAZIL

5

6

7

8

2005 2010 2015

10

8

6

4

2

0

-2

-4

-6

BRAZIL:PRIVATE BANKS NPL*

PROVISIONS RATIO** (LS)ECONOMIC ACTIVITY INDEX***

(INVERTED, ADVANCED BY 3 MONTHS, RS)

% Ann%Chg

* NON-PERFORMING LOANS.** SOURCE: BANCO CENTRAL DO BRASIL.*** SHOWN AS A 3-MONTH MOVING AVERAGE.




Contracting

45



BRAZIL

40

20

0

-20

-40

2000 2002 2004 2006 2008 2010 2012 2014 2016

40

20

0

-20

-40

120

115

110

105

100

95

120

115

110

105

100

95

12

8

4

0

-4

-8

12

8

4

0

-4

-8

NEW TRUCK REGISTRATIONSAnn%

ChgAnn%Chg

CONSUMER CONFIDENCE

BRAZIL*:NARROW** RETAIL SALES VOLUME

Ann%Chg

Ann%Chg

* SHOWN AS A 3-MONTH MOVING AVERAGE.** EXCLUDES VEHICLES AND CONSTRUCTION MATERIALS.

40

45

50

55

60

65

70

1998 2002 2006 2010 2014

40

45

50

55

60

65

70

BRAZIL:BUSINESS CONFIDENCE*


7

6

5

4

32006 2008 2010 2012 2014 2016

70

66

62

58

54

16

14

12

10

8

6

4

2

16

14

12

10

8

6

4

2

CORE TRIMMED MEAN CONSUMER PRICE INFLATION* (LS)

CONSUMER PRICE INFLATION DIFFUSION INDEX*** (RS)

Ann%Chg

%

BRAZIL*:SUPERVISED PRICE INFLATIONFREE MARKET** PRICE INFLATION

Ann%Chg

Ann%Chg

* SOURCE: BANCO CENTRAL DO BRASIL.** INCLUDES ALL NON-SUPERVISED PRICES.*** SHOWN AS A 6-MONTH MOVING AVERAGE.

Collapsed

Confidence at record low




Sticky

9%

46



BRAZIL

1000

800

600

400

300

200

2006 2008 2010 2012 2014 2016

1000

800

600

400

300

200

1600

1200

800

600

400

1600

1200

800

600

400

IN US$


BRAZILIAN BANKS: STOCK PRICES*400-DAY MOVING AVERAGE


600

500

400

300

200

2010 2012 2014 2016

600

500

400

300

200

600

500

400

300

200

600

500

400

300

200

CAIXA ECONOMICA FEDERAL 2022 US$ BOND SPREADOVER U.S. TREASURYS**

BPs BPs

BNDES 2020 US$ BOND SPREADOVER U.S. TREASURYS*

BPs BPs

* BRAZILIAN DEVELOPMENT BANK (BNDES) US$ BONDS MATURING JUL. 2020 OVER 7-YEAR U.S. TREASURYS.** CAIXA ECONOMICA FEDERAL (CEF) US$ BONDS MATURING NOV. 2022 OVER 7-YEAR U.S. TREASURYS.

600

400

200

0

2006 2008 2010 2012 2014 2016

600

400

200

0

BRAZIL:ON-SHORE U.S. DOLLARFUNDING SPREAD*

BPs BPs

* 3-MONTH CUPOM CAMBIAL OVER 3-MONTH LIBOR; SHOWN AS A 10-DAY MOVING AVERAGE.

400 300 200 100 0

-100-200-300

2006 2008 2010 2012 2014 2016

400 300 200 100 0

-100-200-300

-100

0

100

200

-100

0

100

200

CORPORATE SPREADS

BPs BPs

SOVEREIGN SPREADS

BRAZIL MINUS EMERGING MARKETS*EXCLUDING VENEZUELA AND ARGENTINA:

BPs BPs

* SOURCE: J.P. MORGAN CHASE & CO.



Sign ofstress

?

47



BRAZIL

300

250

200

150

100

50

1990 1995 2000 2005 2010 2015

300

250

200

150

100

50

BRAZIL VS EMERGING MARKETS:STOCK PRICES IN US$*

* REBASED TO JAN. 1990=100.

110

100

90

80

70

60

50

1995 2000 2005 2010 2015

110

100

90

80

70

60

50

BRAZIL: REAL EFFECTIVE EXCHANGE RATE*MEAN+/- ONE STANDARD DEVIATION+/- TWO STANDARD DEVIATION

* AVERAGE OF CPI BASED AND PPI BASED REAL EFFECTIVE EXCHANGE RATES; SOURCE: J.P. MORGAN CHASE & CO.

Mean

EMS downgraded

x© BCA Research 2016© BCA Research 2016

20

18

16

14

12

10

8

2006 2008 2010 2012 2014 2016

20

18

16

14

12

10

8

BRAZIL:3-YEAR NOMINALGOVERNMENT BOND YIELD


% %

500

450

400

350

300

250

200

150

100

2010 2012 2014 2016

500

450

400

350

300

250

200

150

100

BRAZIL:5-YEAR SOVEREIGN CDS


BPs BPsEMS went long Feb./05

EMS booked profits Jan./13

EMS went long Jul/15


48



MEXICO: NOT INFALLIBLE

4

2

0

-2

1990 1995 2000 2005 2010 2015

4

2

0

-2

-6

-4

-2

0

2

240

200

160

120

80

PRODUCTIVITY*:MEXICOEMERGING MARKETS (EXCLUDING CHINA**)

Ann%Chg

Ann%Chg

MEXICO VS EMERGING MARKETS:PRODUCTIVITY*

(EXCLUDING CHINA**) (LS)STOCK PRICES*** IN US$ (RS)

Ann%Chg

* SOURCE: THE CONFERENCE BOARD, TOTAL ECONOMY DATABASE.** MARKET CAP-WEIGHTED AGGREGATE OF 20 EM ECONOMIES.*** SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).

100

90

80

70

60

50

40

2008 2010 2012 2014

100

90

80

70

60

50

40

TOTAL NON-PUBLIC NON-FINANCIAL DEBTAS A % OF GDP

MEXICO EMERGING MARKETS

(EXCLUDING CHINA)

% OfGDP

% OfGDP

130

120

110

100

90

80

1990 1995 2000 2005 2010 2015

130

120

110

100

90

80

TOTAL FACTOR PRODUCTIVITY

*SOURCE: THE CONFERENCE BOARD, TOTAL ECONOMY DATABASE.

20

15

10

5

0

-5

-10

-15

2006 2008 2010 2012 2014 2016

8

6

4

2

0

-2

-4

-6

MEXICO:PRODUCER PRICE INDEX:

ELECTRICITY, GAS AND WATER (LS)

ECONOMIC ACTIIVITY INDEX (RS)

Ann%Chg

Ann%Chg


No imminent debt hangover

Reforms kicking in

India

Brazil

Mexico

South Africa© BCA Research 2016© BCA Research 2016

?

49



MEXICO

3

4

5

2006 2008 2010 2012 2014 2016

3

4

5

4.8

4.6

4.4

4.2

4.0

4.8

4.6

4.4

4.2

4.0

CONSUMER PRICE INFLATION:UNDERLYING CORE

Ann%Chg

Ann%Chg

MEXICO:NOMINAL WAGE GROWTH*

MANUFACTURINGSERVICES

Ann%Chg

Ann%Chg

* SOURCE: BANCO DE MEXICO AND INEGI.

-3

-2

-1

0

2006 2008 2010 2012 2014 2016-3

-2

-1

0

MEXICO:FISCAL THRUST*

% %

* CHANGE IN CYCLICALLY-ADJUSTED PRIMARY FISCAL BALANCE AS A % OF POTENTIAL GDP; SOURCE: IMF.

3

2

1

0

-1

-2

-3

-4

-5

2008 2010 2012 2014 2016

2.5

2.0

1.5

1.0

.5

0

-.5

-1.0

-1.5

-2.0

MEXICO:OUTPUT GAP* (LS)ANNUAL CHANGE IN

CORE INFLATION (RS)

% %

* SHOWN AS A % OF POTENTIAL GDP; SOURCE: BANCO DE MEXICO.

-5

-4

-3

-2

-1

0

1

1995 2000 2005 2010 2015

-5

-4

-3

-2

-1

0

1

-4

-3

-2

-1

0

1

-4

-3

-2

-1

0

1

MEXICAN CURRENTACCOUNT BALANCEAS A % OF GDP:

TOTALEXCLUDING OIL TRADE*%of

GDP%ofGDP

MEXICAN FISCAL BALANCE AS A % OF GDP:TOTALEXCLUDING PEMEX

%ofGDP

%ofGDP

*ADJUSTED FOR BOTH EXPORTS AND IMPORTS OF OIL AND OIL DERIVATIVES

Tame wage growth

Record low


Fiscal policy to stay tight



-3%

-3%

50



MEXICO

5.4

5.0

4.6

4.2

3.8

3.4

2010 2012 2014 2016

5.4

5.0

4.6

4.2

3.8

3.4

5.4

5.0

4.6

4.2

3.8

3.4

5.4

5.0

4.6

4.2

3.8

3.4

COMMERCIAL PAPER INTEREST RATE**% %

MEXICO:PRIME LENDING RATE*

% %

*SOURCE: IMF**SOURCE BANXICO

8

6

4

2

0

-2

2005 2007 2009 2011 2013 2015 2017

8

6

4

2

0

-2

-4

60

40

20

0

20

40

25

20

15

10

5

0

-5MARGINAL PROPENSITY TO CONSUME**

PROXY (ADVANCED BY 6 MONTHS, LS)RETAIL SALES VOLUME*** (RS)Ann%

ChgAnn%Chg

MEXICO:PRIME LENDING RATE*

(ADVANCED BY 12 MONTHS, INVERTED, LS)

PRIVATE SECTOR CREDIT (RS)

Ann%Chg

Ann%Chg

*SOURCE: IMF**CALCULATED AS THE ANNUAL RATE OF CHANGE OF THE RATIO OFDEMAND TO SAVINGS DEPOSITS***SHOWN AS A 6-MONTH MOVING AVERAGE




30

20

10

0

-10

-20

2008 2010 2012 2014 2016

30

20

10

0

-10

-20

MEXICANNON-OIL EXPORTS*

Ann%Chg

Ann%Chg


Headwinds for manufacturing

51



600

500

400

300

200

100

2010 2011 2012 2013 2014 2015 2016

600

500

400

300

200

100

MEXICO:NET CENTRAL BANK REPOS WITHCOMMERCIAL BANKS

6-WEEK MOVING AVERAGE

BnMXN

BnMXN

50

40

30

20

10

2015 2016

50

40

30

20

10

4.8

4.6

4.4

4.2

4.0

3.8

3.6

3.4

4.8

4.6

4.4

4.2

4.0

3.8

3.6

3.4

U.S.:6-MONTH FED FUNDSDISCOUNTER

BPs BPs

MEXICO:1-YEAR SWAP RATE

% %



MEXICO

18

16

14

12

10

8

6

4

2005 2007 2009 2011 2013 2015 2017

18

16

14

12

10

8

6

4

20

16

12

8

4

20

16

12

8

4DOMESTIC CURRENCYCOMPONENT OFMONEY (M1)Ann%

ChgAnn%Chg

MEXICO:MONETARY BASE*

Ann%Chg

Ann%Chg

*MONETARY BASE = BANK RESERVES PLUS MONEY (M0) SUPPLY.

350

300

250

200

150

100

50

0

2006 2008 2010 2012 2014 2016

350

300

250

200

150

100

50

0

MEXICAN 10/1-YEAR SWAP CURVEU.S. 10/1-YEAR YIELD CURVE

BPs BPs

EMS recommened paying 1-year rates Dec 2/15

Decoupled

Central bank reducing liquidity injections

Bet on yield curve flattening

52



.30

.25

.20

.15

2002 2006 2010 2014

.30

.25

.20

.15

MXN vs BRL800-DAY MOVING AVERAGE

MXN/BRL

MXN/BRL

500

400

300

200

100

1995 2000 2005 2010 2015

500

400

300

200

100

300

250

200

150

100

50

300

250

200

150

100

50


MEXICO VS. EMERGING MARKETS:STOCK PRICES*


IN US$

* SOURCE: MSCI Inc.(SEE COPYRIGHT DECLARATION).

200180160140

120

100

80

60

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

200180160140

120

100

80

60

110100 90

80

70

60

50

1995 2000 2005 2010 2015

110100 90

80

70

60

50

(BASED ON UNIT LABOR COSTS)**

MEXICO: REAL EFFECTIVE EXCHANGE RATE*MEAN+/- ONE STANDARD DEVIATION+/- TWO STANDARD DEVIATIONS

*AVERAGE OF CPI BASED AND PPI BASED REAL EFFECTIVE EXCHANGERATES; SOURCE: J.P. MORGAN CHASE & CO.**SOURCE: OECD





?

At fair value

Very expensive

Mean

Mean

Not cheap

Not very cheap yet

Mean

Mean

MEXICO

1.6

1.4

1.2

1.0

.8

.6

.4

1990 1995 2000 2005 2010 2015

1.6

1.4

1.2

1.0

.8

.6

.4

40

35

30

25

20

15

10

5

40

35

30

25

20

15

10

5

MEXICO VS. EMERGING MARKETS:CYCLICALLY-ADJUSTED P/E RATIO*

MEAN+/- ONE STANDARD DEVIATION+/- TWO STANDARD DEVIATIONS

MEXICO: CYCLICALLY-ADJUSTED P/E RATIO*

*CALCULATED USING STOCK PRICES AND EPS IN U.S.DOLLAR TERMS, AND THEN DEFLATING BY U.S. CONSUMER PRICEINFLATION; SOURCE OF DATA: MSCI Inc. (SEE COPYRIGHT DECLARATION)

53



COLOMBIA: CYCLICAL DOWNTURN, AMID STRUCTURAL STRENGTH

3.5

3.0

2.5

2.0

1.5

1995 2000 2005 2010 2015

3.5

3.0

2.5

2.0

1.5

2.5

2.0

1.5

1.0

2.5

2.0

1.5

1.0

4

3

2

1

0

-1

4

3

2

1

0

-1

POTENTIAL GDP GROWTH**:COLOMBIAEMERGING MARKETS EXCLUDING

CHINA***% %

WORKING AGE POPULATION:COLOMBIAEMERGING MARKETS

Ann%Chg

Ann%Chg

PRODUCTIVITY GROWTH*:COLOMBIAEMERGING MARKETS EXCLUDING

CHINA***

% %

* SHOWN AS A 5-YEAR MOVING AVERAGE; SOURCE: THE CONFERENCE BOARD, TOTAL ECONOMY DATABASE.** POTENTIAL GDP GROWTH RATE EQUALS LABOR FORCE GROWTH RATE PLUS PRODUCTIVITY GROWTH RATE.*** AGGREGATE OF 18 EMERGING MARKET ECONOMIES.

2

0

-2

-4

-6

1980 1985 1990 1995 2000 2005 2010 2015

2

0

-2

-4

-6

26

24

22

20

18

16

14

12

26

24

22

20

18

16

14

12

COLOMBIA:AS A % OF GDP

CURRENT ACCOUNTBALANCE*

% ofGDP

% ofGDP

NATIONAL SAVINGS RATE*GROSS FIXED CAPITAL FORMATION

% ofGDP

% ofGDP

* SOURCE: IMF, WORLD ECONOMIC OUTLOOK; 2016 FORECAST.

4

3

2

1

0

-1

-2

1950 1960 1970 1980 1990 2000 2010 2020

4

3

2

1

0

-1

-2

COLOMBIA:LABOR PRODUCTIVITY*

Ann%Chg

Ann%Chg

* SOURCE:THE CONFERENCE BOARD, TOTAL ECONOMY DATABASE.


© BCA Research 2016 -6%

Low domestic savings rate

54



18

16

14

12

10

2002 2004 2006 2008 2010 2012 2014 2016

18

16

14

12

10

25

20

15

10

5

0

25

20

15

10

5

0

UNEMPLOYMENT RATE**% %

COLOMBIA:REAL GROSS FIXED CAPITAL EXPENDITURE*

Ann%Chg

Ann%Chg

* SOURCE: NATIONAL DEPARTMENT OF STATISTICS.** SHOWN AS A 12-MONTH MOVING AVERAGE; SOURCE: BLOOMBERG.

16

12

8

4

0

-4

-8

-12

2004 2006 2008 2010 2012 2014 2016

14

12

10

8

6

4

2

0

-2

MARGINAL PROPENSITY TO CONSUME PROXY* (ADVANCED BY 3-MONTHS, LS)

RETAIL SALES VOLUME** (RS)

Ann%Chg

Ann%Chg

* CALCULATED AS DEMAND DEPOSITS OVER TOTAL DEPOSITS; SHOWN AS A 3-MONTH MOVING AVERAGE.** EXCLUDES FUELS AND VEHICLES.

COLOMBIA

7

6

5

4

3

2

2010 2012 2014 2016

350

300

250

200

150

100

50

0

-50

COLOMBIA:REAL GDP GROTWH* (LS)5/1-YEAR OIS (IBR) CURVE (RS)

Ann%Chg

BPs

* SHOWN AS A 24-WEEK MOVING AVERAGE.

20

16

12

8

4

0

2000 2002 2004 2006 2008 2010 2012 2014 2016

20

16

12

8

4

0

COLOMBIA*:CURRENT ACCOUNT DEFICITNET FDINET PORTFOLIO FLOWS

BnUS$

BnUS$

* ALL SERIES SHOWN AS A 12-MONTH MOVING TOTALS; SOURCE: BANCO DE LA REPUBLICA DE COLOMBIA.





Inverted

55



22

20

18

16

14

12

10

8

6

4

2

1995 2000 2005 2010 2015

22

20

18

16

14

12

10

8

6

4

2

20

18

16

14

12

10

8

6

4

2

20

18

16

14

12

10

8

6

4

2

12

10

8

6

4

2

12

10

8

6

4

2

MORTGAGE LOANS

% %

CONSUMER LOANS

% %COLOMBIA:(AS A % OF TOTAL LOANS):

NPLs*PROVISIONS**

COMMERCIAL LOANS

% %

* SOURCE: SUPERINTENDENCIA FINANCIERA DE COLOMBIA.** SOURCE: SUPERINTENDENCIA FINANCIERA DE COLOMBIA; BCA CALCULATION.

1210 8 6 4 2 0-2-4

2005 2010 2015

1210 8 6 4 2 0-2-4

120

115

110

105

100

95

90

85

120

115

110

105

100

95

90

85

NET REPOSWITH THE CENTRAL BANK

TnCOP

TnCOP

COLOMBIA:LOAN-TO-DEPOSIST RATIO

% %

8

10

12

14

16

18

20

2002 2004 2006 2008 2010 2012 2014 2016 2018

35

30

25

20

15

10

5

0

5

28

24

20

16

12

8

80

40

0

-40

BANK'S LENDING RATE (INVERTED, ADVANCED BY 9-MONTHS, LS)

PRIVATE CREDIT (RS)% Ann%

Chg

COLOMBIA:MONEY (M1) SUPPLY (LS)POLICY RATE*

(INVERTED, ADVANCED BY 9-MONTHS, RS)

Ann%Chg

Ann%Chg

* SOURCE: BANCO DE LA REPUBLICA DE COLOMBIA.

COLOMBIA




115%

Commercial banks borrowing from central bank

56



400

350

300

250

200

150

100

50

1995 2000 2005 2010 2015

400

350

300

250

200

150

100

50

COLOMBIA RELATIVE TOEMERGING MARKETS:STOCK PRICES IN US$*


180

160

140

120

100

2002 2004 2006 2008 2010 2012 2014 2016

180

160

140

120

100

3000

2600

2200

1800

3000

2600

2200

1800

COLOMBIAN PESO VERSUS EQUALLY-WEIGHTED BASKET OF EUR & JPY


COLOMBIAN PESO VERSUS U.S. DOLLAR800-DAY MOVING AVERAGE

USD/COP

USD/COP

400

350

300

250

200

150

100

50

2000 2005 2010 2015

400

350

300

250

200

150

100

50

COLOMBIA* RELATIVE TO PERU**:BANK STOCKS PRICES IN US$

* BOTH SERIES REBASED T0 100 AT JANUARY 1996; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).** SOURCE: DATASTREAM.

300

250

200

150

100

50

0

2011 2012 2013 2014 2015 2016

300

250

200

150

100

50

0

COLOMBIA:10/1-YEAR SWAP CURVE

Bps Bps

COLOMBIA





EMS downgraded to underweight Oct 9/13

EMS recommended curve flattener Sept 16/15

57



PERU: STILL FIGHTING THE “IMPOSSIBLE TRINITY”

8

6

4

2

0

-2

-4

-6

1995 2000 2005 2010 2015

90

100

110

120

130

12

10

8

6

4

2

0

2

12

10

8

6

4

2

0

-2

300

200

100

250

200

150

100

PORTFOLIO FLOWS* (LS)BROAD TRADE-WEIGHTED U.S. DOLLAR**

(INVERTED, RS)

BnUS$

CURRENT ACCOUNT DEFICIT*NET FDI*

BnUS$

BnUS$

PERU:EXPORT PRICE INDEX

IN US$ (LS)EXPORT VOLUMES (RS)

* SHOWN AS 4-QUARTER MOVING TOTAL.** SOURCE: FEDERAL RESERVE.

2

0

-2

-4

-6

-8

1995 2000 2005 2010 2015

2

0

-2

-4

-6

-8

-6

-4

-2

0

-6

-4

-2

0

30

25

20

15

10

30

25

20

15

10

16

14

12

16

14

12

CURRENT ACCOUNT DEFICITAS A % OF GDP

%ofGDP

%ofGDP

PERUVIAN BANKING INSTITUTIONS:NET FOREIGN ASSETSAS A % OF GDP

%ofGDP

%ofGDP

TOTAL EXTERNAL DEBTAS A % OF GDP*

%ofGDP

%ofGDP

PERU:DOMESTICALLY-ORIGINATEDFOREIGN CURRENCYLIABILITIESAS A % OF GDP

%ofGDP

%ofGDP

* SOURCE: BIS; BCA CALCULATIONS.


?

14%

Foreign currency liabilities = 14% + 36% = 50% of GDP

36%

Large

-4%

58



PERU

302520

15

10

5

2008 2010 2012 2014 2016

302520

15

10

5

40353025

20

15

10

40353025

20

15

10

PERU:CENTRAL BANK DOMESTIC ASSETS*

BnPEN

BnPEN

PERU:CENTRAL BANK FOREIGNCURRENCY LIABILITIES

US$Bn

US$Bn

* CALCULATED AS TOTAL CENTRAL BANK ASSETS EXCLUDING FOREIGN RESERVES.

140

130

120

110

100

90

80

70

2006 2008 2010 2012 2014 2016

140

130

120

110

100

90

80

70

60

40

20

0

60

40

20

0

LOCAL CURRENCY:LOAN-TO-DEPOSIT RATIO

% %

LOCAL CURRENCY:CREDITDEPOSITS

Ann%Chg

Ann%Chg

30

20

10

0

-10

1995 2000 2005 2010 2015

60

40

20

0

-20

PERU:PRIVATE SECTOR CREDIT

IN REAL TERMS* (LS)EXPORT PRICES IN US$

(ADVANCED BY 12 MONTHS, RS)

Ann%Chg

Ann%Chg

* DEFLATED BY CONSUMER PRICE INDEX FOR LIMA.

120

110

100

90

80

60

70

2006 2008 2010 2012 2014 2016

120

110

100

90

80

60

70

40

30

20

10

0

-10

-20

40

30

20

10

0

-10

-20

FOREIGN CURRENCY (US$):LOAN-TO-DEPOSIT RATIO

% %

FOREIGN CURRENCY (US$):CREDITDEPOSITS

Ann%Chg

Ann%Chg





152%!

59



PERU

160140120100 80 60 40 20 0

-20-40

2000 2002 2004 2006 2008 2010 2012 2014 2016

40

30

20

10

0

-10

4030

20

10

5

4030

20

10

5

NET INTERNATIONAL RESERVES* (LS)NARROW MONEY (M1) SUPPLY (RS)

Ann%Chg

Ann%Chg

PERU:NET INTERNATIONALRESERVES*

US$Bn

US$Bn

* CENTRAL BANK'S GROSS RESERVES MINUS DOMESTIC FOREIGN CURRENCY LIABILITIES.

12

10

8

6

4

2

0

2004 2006 2008 2010 2012 2014 2016

30

20

10

0

REAL GDP GROWTH (LS)NARROW MONEY (M1)

SUPPLY (ADVANCED 6 MONTHS; RS)

Ann%Chg

Ann%Chg

7

6

5

4

2012 2014 2016

7

6

5

4

5.5

5.0

4.5

4.0

3.5

5.5

5.0

4.5

4.0

3.5

5-YEAR NOMINALGOVERNMENT BOND YIELD**

6-YEAR MOVING AVERAGE% %

PERU:INTERBANK RATE*

% %

*SHOWN AS A 5-DAY MOVING AVERAGE**NOMINAL GOVERNMENT BOND MATURING AUG/2020

700600500400300

200

100

50

2000 2002 2004 2006 2008 2010 2012 2014 2016

700600500400300

200

100

50

1000 800 600

400 300

200

100

50

1000 800 600

400 300

200

100


IN LOCALCURRENCYTERMS

IN US$

PERUVIAN BANKS:STOCK PRICES*

* REBASED TO JAN, 2000= 100; SOURCE: DATASTREAM.



Fade the rally

60



PERU

800

600

400

300

200

100

1995 2000 2005 2010 2015

2.4

2.6

2.8

3.0

3.2

3.4

3.6

1000 800 600

400 300

200

100

150

125

100

75

50

BANK STOCK PRICES IN LOCAL CURRENCY* (LS)

PERUVIAN NEW SOL VS. U.S. DOLLAR (RS)

USD/PEN

PERU:BANK STOCK PRICES*

IN US$ (LS)EXPORT PRICES

IN US$ (RS)

* SOURCE: DATASTREAM.

500

450

400

350

300

250

200

150

2004 2006 2008 2010 2012 2014 2016

500

450

400

350

300

250

200

150

18001600140012001000

800

600

400

18001600140012001000

800

600

400


STOCK PRICES*:PERUVS EMERGING MARKETS

PERUVIANSTOCK PRICES* (US$)


10

9

8

7

6

5

4

3

2

1

2000 2002 2004 2006 2008 2010 2012 2014 2016

10

9

8

7

6

5

4

3

2

1

PERU:COMMERCIAL BANKSNPL* RATIO

% %

* NON-PERFROMING LOANS; SOURCE: BANKING SUPERVISOR, PERU.

200

100

0

-100

-200

-300

-400

-500

2006 2008 2010 2012 2014 2016

4500

4000

3500

3000

2500

2000

PERU: CORPORATE MINUS SOVEREIGN OAS* (INVERTED, LS)

INDUSTRIAL METALS PRICES**(RS)

BPs

* OPTION ADJUSTED SPREAD; SOURCE: BARCAP.** LMEX INDEX; SOURCE: LONDON METALS EXCHANGE.



61



CHILE: STILL MOVING LEFTWARDS, TOWARDS STAGFLATION?

20

18

16

14

12

10

8

6

2010 2012 2014 2016

20

18

16

14

12

10

8

6

28

26

24

22

20

28

26

24

22

20CAPITAL EXPENDITURES (IN REAL TERMS)AS % OF GDP*

NON-FINANCIAL CORPORATESPUBLIC SECTOR*

%ofGDP

%ofGDP

CHILE:CAPITAL EXPENDITURES(IN REAL TERMS)AS % OF GDP*

%ofGDP

%ofGDP

* SHOWN AS A 4-QUARTER MOVING AVERAGE; SOURCE: BANCO CENTRAL DE CHILE AND BCA CALCULATIONS.

13

12

11

10

2000 2005 2010 2015

13

12

11

10

42

40

38

36

34

42

40

38

36

34

54

52

50

48

46

44

54

52

50

48

46

44

TAXES LESS SUBSIDIES

% %

WAGES

% %

NET OPERATING SURPLUS

CHILEAN INCOME AS A % GDP*:

% %

* SOURCE: BANCO CENTRAL DE CHILE.

16

15

14

13

12

11

10

9

1960 1970 1980 1990 2000 2010

16

15

14

13

12

11

10

9

CHILE:GOVERNMENT EXPENDITUREAS A % OF GDP*

%ofGDP

%ofGDP

* SOURCE: WORLD BANK, WDI.

140

130

120

110

100

1995 2000 2005 2010 2015

140

130

120

110

100

CHILE:REAL WAGES*

* CALCULATED AS REAL HOURLY WAGE TIMES HOURS WORKED; SOURCE: BANCO CENTRAL DE CHILE.





Annual growth rate of 2% since 1994 and 2.5% since 2009

The slope steepened

62



CHILE

20

10

0

-10

2005 2010 2015

20

10

0

-10

20

15

10

5

0

20

15

10

5

0

80

70

60

50

40

30

20

10

0

-10

RETAIL SALES VOLUME*INDUSTRIAL PRODUCTION

Ann%Chg

Ann%Chg

BROAD MONEY SUPPLY (M2)PRIVATE SECTOR CREDIT

Ann%Chg

Ann%Chg

CHILE:BUSINESS CONFIDENCE INDEX

(ADVANCED BY 3 MONTHS, LS)CAPEX IN REAL TERMS (RS)

Ann%Chg


12

10

8

6

4

2

0

-2

-4

1995 2000 2005 2010 2015

12

10

8

6

4

2

0

-2

-4

CHILE:REAL PERSONAL CONSUMPTION*

Ann%Chg

Ann%Chg

* SHOWN AS A 2-QUARTER MOVING AVERAGE.

50

40

30

20

10

0

-10

-20

-30

-40

2006 2008 2010 2012 2014 2016

30

20

10

0

-10

-20

-30

CHILE*:EXPORTS (LS)NON-MINING EXPORTS (RS)

Ann%Chg

Ann%Chg




8

6

4

2

0

2010 2012 2014 2016

8

6

4

2

0

30.5

30.0

29.5

29.0

71.0

70.5

70.0

69.5

88

87

86

85

84

83

18

17

16

15

14

13

12

TOTAL EMPLOYMENT

Ann%Chg

Ann%Chg

PERMANENT (LS)TEMPORARY (RS)% %

CHILE: EMPLOYMENT* AS A SHARE OF TOTAL:WITH CONTRACT (LS)VERBAL CONTRACT

ONLY (RS)

% %

*SOURCE: NATIONAL STATISTICS INSTITUTE, CHILE.

Weak

63



CHILE

-40

0

40

2004 2006 2008 2010 2012 2014 2016

-40

0

40

-40

0

40

80

-40

0

40

80

LOOSER STANDARDS

TIGHTER STANDARDS

CONSUMERS

LOOSER STANDARDS

TIGHTER STANDARDS

CHILEAN CREDIT STANDARDS*:CORPORATES

* SOURCE: BANCO CENTRAL DE CHILE.

5.5

5.0

4.5

4.0

3.5

2000 2005 2010 2015

5.5

5.0

4.5

4.0

3.5

30

25

20

15

10

5

0

30

25

20

15

10

5

0

MONETARY BASEAS % OF GDP

%ofGDP

%ofGDP

CHILE*:MONETARY BASE

Ann%Chg

Ann%Chg


30

20

10

0

-10

2005 2010 2015

30

20

10

0

-10

3.0

2.8

2.6

2.4

2.2

2.0

1.8

2008 2010 2012 2014 2016

3.0

2.8

2.6

2.4

2.2

2.0

1.8

CONSUMER CREDITCORPORATE CREDIT

Ann%Chg

Ann%Chg

CHILEAN BANKS*:AS SHARE OF TOTAL LOANS

PROVISIONSPAST-DUE LOANS

% %

* SOURCE: SUPERINTENDENCY OF BANKS & FINANCIAL INSTITUTIONS.

8

6

4

2

0

-2

2000 2005 2010 2015

8

6

4

2

0

-2

8

6

4

2

0

8

6

4

2

0

UNIT LABOR COSTS**(BASED ON NOMINAL WAGES)Ann%

ChgAnn%Chg

CHILE:CORE INFLATION*

Ann%Chg

Ann%Chg

* EXCLUDING FOOD AND FUELS.** CALCULATED AS WAGES TIMES HOURS WORKED TIMES EMPLOYMENT DIVIDED BY REAL GDP.





Strong

Sticky

Sticky

64



CHILE

100

200

300

400

500

2005 2010 2015

100

200

300

400

500

30

25

20

15

30

25

20

15CHILE:CORPORATE SPREADS**BPs BPs

CHILE:NON-FINANCIAL CORPORATEFOREIGN DEBT AS A % OF GDP*

%ofGDP

%ofGDP

* SOURCE: BIS; BCA CALCULATION.** SOURCE: J.P. MORGAN CHASE & Co.

8

7

6

5

4

3

2004 2006 2008 2010 2012 2014 2016

8

7

6

5

4

3

700

650

600

550

500

450

700

650

600

550

500

450

3-YEAR GOVERNMENT BOND YIELD% %

CHILEAN PESO VS U.S. DOLLAR CLP/USD

CLP/USD

120

100

80

60

40

1990 1995 2000 2005 2010

120

100

80

60

40

CHILE:MARKET CAP* AS A % OF GDPTIME TRENDTIME TREND +/- 20%

% %

* DATATREAM INDEX.

130

120

110

100

90

80

70

1990 1995 2000 2005 2010 2015

130

120

110

100

90

80

70

2500

2000

1500

1000

500

2500

2000

1500

1000

500

CHILE VS EMERGING MARKETS:STOCK PRICES IN US$*

CHILEAN STOCK PRICES IN US$*1600-DAY MOVING AVERAGE3200-DAY MOVING AVERAGE





Breakout

24.4%

EMS went short Nov 2012

?

65



36

32

28

24

20

16

12

2012 2014 2016

36

32

28

24

20

16

12

14121110 9 8 7 6

5

14121110 9 8 7 6

5

3-MONTH T-BILL RATE*

30-DAY DEPOSIT RATE**

% %

ARGENTINE PESOVERSUS U.S. DOLLAR

ARS/USD

ARS/USD

* 3-MONTH LEBAC NOTES.** PRIVATE BANKS BALDAR RATE.

150

140

130

120

110

100

90

80

1995 2000 2005 2010 2015

1800

1600

1400

1200

1000

800

600

400

ARGENTINA:TERMS OF TRADE* (LS)SOYBEAN PRICES (RS)

Cent/Bushel

* SOURCE: NATIONAL STATISTICS & CENSUS INSTITUTE.

35

30

25

20

15

10

5

2004 2006 2008 2010 2012 2014 2016

35

30

25

20

15

10

5

20

30

40

50

20

30

40

50

-2

0

2

4

-2

0

2

4

3-MONTH T-BILL RATE

% %

FOREIGN RESERVESBn

US$BnUS$

CURRENT ACCOUNT BALANCEAS A % OF GDP

% ofGDP

% ofGDP

50

40

30

20

10

0

2006 2008 2010 2012 2014 2016

50

40

30

20

10

0

-6

-4

-2

0

2

4

-6

-4

-2

0

2

4

GOVERNMENT EXPENDITURES**(NOMINAL, IN PESOS)

Ann%Chg

Ann%Chg

FISCAL BALANCE AS A % OF GDP*:NOMINALPRIMARY

% ofGDP

% ofGDP

* SHOWN AS A 2-QUARTER MOVING AVERAGE; SOURCE: MECON.** SHOWN AS A 6-MONTH MOVING AVERAGE.




1000 basis point rate hike

Macri elected President

ARGENTINA: BACK TO ORTHODOXY, BUT CHALLENGES REMAIN

Can Macri follow through with shock therapy?

?

66



ARGENTINA

40

30

20

10

0

-10

-20

2006 2008 2010 2012 2014 2016

40

30

20

10

0

-10

-20

ARGENTINA:REAL INTEREST RATES* (LS)BROAD (M2) MONEY SUPPLY (RS)

% Ann%Chg

* CALCULATED AS BADLAR MINUS 12-MONTH INFLATION EXPECTATIONS.

0

5

10

15

20

25

30

2004 2006 2008 2010 2012 2014 2016

60

50

40

30

20

10

0

-10

3-MONTH T-BILL RATE* (INVERTED AND ADVANCED 9 MONTHS, LS)

PRIVATE SECTOR CREDIT (RS)

% Ann%Chg

* CENTRAL BANK NOTES (LEBAC).

80

70

60

50

40

30

20

1995 2000 2005 2010 2015

80

70

60

50

40

30

20

ARGENTINA:DOMESTIC CREDIT AS A % OF TOTAL

PRIVATE SECTORPUBLIC SECTOR

% %

60

55

50

45

40

35

2008 2010 2012 2014 2016

36

32

28

24

16

20

15

10

5

0

-5

-10

-15 -40

-20

0

20

40

CONSUMER CONFIDENCE (LS)12-MONTH INFLATION

EXPECTATIONS* (INVERTED, RS) %

INDUSTRIAL PRODUCTION VOLUME* (LS)

IMPORTS IN US$* (RS)

Ann%Chg

Ann%Chg

*SHOWN AS A 3-MONTH MOVING AVERAGE



?

?

67



ARGENTINA

-4

-2

0

2

2000 2005 2010 2015

-4

-2

0

2

.4

.6

.8

1.2

1.62.0

.4

.6

.8

1.2

1.62.0

ARGENTINE TRADE BALANCE WITH BRAZILUS$Bn.

US$Bn.

ARGENTINE PESO v.s. BRAZILIAN REAL

ARS/BRL

ARS/BRL

950

900

850

800

750

700

2010 2012 2014 2016

950

900

850

800

750

700

1100

1000

900

800

700

600

500

1100

1000

900

800

700

600

500

250

200

150

100

75

50

250

200

150

100

75

50

BRAZIL

VENEZUELA

SOVEREIGN CREDIT TOTAL RETURN INDEX*

ARGENTINA

* SOURCE: BARCLAYS.

140

130

120

110

100

90

80

70

2006 2008 2010 2012 2014 2016

28

24

20

16

12

8

4

ARGENTINA:BANK STOCK PRICES* IN US$ (LS)30-DAY DEPOSIT RATE** (RS)

%

* SHOWN AS A NATURAL LOGARITHM; SOURCE: MSCI Inc. (SEE COPYRIGHT DECLARATION).** PRIVATE BANKS BADLAR RATE.



?

Overweight

68



6

4

2

0

-2

-4

-6

2010 2012 2014 2016

6

4

2

0

-2

-4

-6

140

120

100

80

60

40

140

120

100

80

60

40

REAL GDP GROWTHAnn%

ChgAnn%Chg

VENEZUELA:TAX REVENUE*

Ann%Chg

Ann%Chg

* SOURCE: SENIAT, VENEZUELA.

60

80

100

120

140

1990 1995 2000 2005 2010 2015

60

80

100

120

140

120

80

40

0

120

80

40

0

120

80

40

0

120

80

40

0

LOAN-TO-DEPOSIT RATIO*% %

PRIVATE SECTOR CREDIT

Ann%Chg

Ann%Chg

VENEZUELA:MONEY (M1)GROWTH

Ann%Chg

Ann%Chg


60

40

20

0

-20

1995 2000 2005 2010 2015

60

40

20

0

-20

CURRRENT ACCOUNT BALANCE*

QUARTERLY, ANNUALIZED

BnUSD

BnUSD

* SHOWN AS A 4-QUARTER MOVING TOTAL; SOURCE:J.P.MORGAN CHASE & CO.



146% growth all due to inflation...

...as the economy is imploding

100%

75%

130%

-7%!

Worse than in 2008

VENEZUELA: TIME IS UP

69



VENEZUELA

110100 90 80 70 60

50

40

30

202011 2012 2013 2014 2015 2016

110100 90 80 70 60

50

40

30

20

30282624

22

20

18

16

14

30282624

22

20

18

16

14

VENEZUELAN CRUDE OIL BASKETUS$/Bbl

US$/Bbl

VENEZUELA:FOREIGN RESERVES*

US$Bn

US$Bn

* SOURCE: BANCO CENTRAL DE VENEZUELA.

70

80

90

100

110

2006 2008 2010 2012 2014 2016

70

80

90

100

110

2800

2000

1200

400

2800

2000

1200

400

EMBI** RELATIVE TOTAL RETURN INDEX:VENEZUELA vs. EMERGING MARKETS

VENEZUELA:SOVEREIGN SPREADS*


BPs BPs

* SOURCE:J.P.MORGAN CHASE & CO.** EMERGING MARKETS BOND INDEX; SOURCE:J.P.MORGAN CHASE & CO.

11000

10000

9000

8000

7000

6000

5000

4000

3000

2000

1000

2008 2010 2012 2014 2016

120

100

80

60

VENEZUELA:5-YEAR SOVEREIGN CDS (LS)BRENT SPOT PRICE

(INVERTED, RS)

BPs US$

320

280

240

200

160

120

80

40

2010 2012 2014 2016

320

280

240

200

160

120

80

40

SOVEREIGN DEBTTOTAL RETURN INDEX*:ARGENTINA VERSUS VENEZUELA


* REBASED TO JAN. 2010=100; SOURCE: BARCLAYS.



Only US$12.3 billion, mostly in gold

70



LATIN AMERICA

100

80

60

40

1990 1995 2000 2005 2010 2015

100

80

60

40

EXPORTS BY TECHNOLOGICAL INTENSITY*:(PRIMARY PRODUCTS AS PERCENTAGE OF TOTAL EXPORTS)

% %

* SOURCE: UNECLAC.

BOLIVIA

VENEZUELA

PARAGUAY

ARGENTINA

ECUADOR

BRAZIL

COLOMBIA

PERUCOSTA RICA

MEXICO

CHILE

URUGUAY


CHANGE IN GINI (EARLY 2000S TO LATEST DATA)

CH

AN

GE

IN M

EDIA

N W

EALT

H P

ER A

DU

LT (2

001-

2013

)

300

250

200

150

100

50

0

-50

%

.01 .02 .03 .04 .05 .06 .07 .08 .09

SOURCE: WORLD BANK AND CREDIT SUISSE; BCA CALCULATIONS.

Wealthier median adult

Lower Inequality & Lower Median Wealth

Less inequality

The Boom Years In Review: Inequality & Income Gains


Chile

Colombia

PeruBrazil

Argentina

Mexico

Aside From Mexico, Commodity Dependence Remains Unaltered

71



LATIN AMERICA

30

25

20

15

10

2005 2010 2015

30

25

20

15

10

80

40

20

10

80

40

20

10

(AS % OF TOTAL)LATAM* EX-MEXICO EXPORTS TO:

CHINA U.S.

% %

LATAM* EX-MEXICO EXPORTS TO: CHINA U.S.

BnUSD

BnUSD

* INCLUDES ARGENTINA, BRAZIL, CHILE, COLOMBIA, PERU, AND VENEZUELA.

40

30

20

10

1975 1980 1985 1990 1995 2000 2005 2010 2015

40

30

20

10

U.S. OIL IMPORTS FROM: MIDDLE EAST AND WEST AFRICA* LATAM** NORTH AMERICA***

% %

* INCLUDES ALGERIA, IRAQ, KUWAIT, LIBYA, NIGERIA, QATAR, AND SAUDI ARABIA.** INCLUDES BRAZIL, COLOMBIA AND VENEZUELA.*** INCLUDES CANADA, AND MEXICO.

30

25

20

15

10

52000 2005 2010 2015

30

25

20

15

10

5

50

40

30

50

40

30

CURRENT ECONOMIC SITUATION*(% OF RESPONDENTS ANSWERING VERY GOODAND GOOD)

COUNTRY PERSONAL

% %

LATAM FUTURE ECONOMIC SITUATION*(% OF RESPONDENTS ANSWERING MUCH BETTERAND A LITTLE BETTER)

COUNTRY PERSONAL

% %

* SOURCE: LATINOBAROMETRO.

260

220

180

140

100

60

1995 2000 2005 2010 2015

1.2

1.1

1.0

.9

.8

.7

.6

STOCK PRICES: EMERGING ASIA VS LATIN AMERICA* (LS)

GLOBAL MANUFACTURED GOODS VS RAW MATERIALS PRICES** (RS)

* SHOWN IN U.S. DOLLAR TERMS AND REBASED TO JAN. 2002 = 100; SOURCE: MSCI INC. (SEE COPYRIGHT DECLARATION).** SOURCE: NETHERLANDS BUREAU FOR ECONOMIC POLICY ANALYSIS.



72



POSITIONS INITIATION DATE RETURN

ON EM EQUITY BENCHMARKSHORT EM / LONG U.S. STOCKS DEC 14/10 105.5%

SHORT EM STOCKS MAY 24/11 26.8%

TAIWAN AUG 9/07 19.5%

KOREA IT SECTOR JAN 27/10 69.9%

CZECH REPUBLIC JUN 21/11 -38.3%

CHINA NOV 26/14 5.4%

HUNGARY MAY 20/15 51.1%

INDIA JUNE 24/15 11.0%

POLAND APR 6/16 -10.6%

KOREA (EXCLUDING IT AND BANKS) APR 27/16 -1.5%

INDONESIA JUN 14/11 -8.6%

TURKEY MAR 13/12 -5.9%

BRAZIL AUG 21/12 71.0%

PERU SEP 2/15 -21.4%

MALAYSIA OCT 21/15 -5.8%

HONG KONG - DOMESTIC STOCKS MAR 30/10

RUSSIA OCT 12/10

CHILE DEC 3/14

SOUTH AFRICA JUL 22/15

SINGAPORE SEP 9/15

THAILAND OCT 21/15

MEXICO FEB 10/16

COLOMBIA MAY 4/16

PHILIPPINES MAY 11/16

OVER

WEI

GHT

UNDE

RWEI

GHT

NOTE: RETURNS RELATIVE TO BENCHMARK. MSCI FOR EQUITY RECOMMENDATIONS UNLESS OTHERWISE SPECIFIED. * RETURN INCLUDES THAT OF OUR PREVIOUS CALL: LONG KOREA / SHORT EM BANKS FROM APR 3/12 TILL FEB 19/13.

OTHER EQUITY RECOMMENDATIONS - ABSOLUTE TRADES

SHORT BRAZILIAN BANKS APR 26/11 56.4%

LONG EM EQUITY VOLATILITY (ETF: VXEEM) MAR 6/12 -28.4%

SHORT SOUTH AFRICAN GENERAL RETAILERS APR 23/13 26.5%

SHORT TURKISH BANK STOCKS JUN 4/13 49.2%

SHORT KOREAN AUTO STOCKS JUL 3/13 29.0%

SHORT PERUVIAN BANK STOCKS FEB 18/15 -0.8%

OTHER EQUITY RECOMMENDATIONS - RELATIVE TRADES

LONG EM TECH / SHORT EM MATERIALS FEB 23/10 106.1%

SHORT CHINESE PROPERTY COMPANIES / LONG U.S. HOMEBUILDERS MAR 06/12 118.9%

SHORT EM BANKS / LONG U.S. BANKS FEB 12/13 59.4%

LONG KOREAN BANKS / SHORT INDONESIAN BANKS* FEB 19/13 -9.3%

LONG CHINESE SMALL CAPS / SHORT EM SMALL CAPS NOV 20/13 1.0%

LONG INDIAN / SHORT INDONESIAN STOCKS JUL 30/14 7.0%

SHORT EM STOCKS / LONG U.S. 30-YEAR TREASURIES APR 08/15 18.1%

LONG RUSSIA / SHORT MALAYSIA STOCKS MAR 2/16 15.8%

LONG CENTRAL EUROPE BANKS / SHORT EURO AREA BANKS STOCKS APR 6/16 -6.8%

LONG KOREAN / SHORT EM STOCKS APR 27/16 -2.5%

LONG COLOMBIAN BANKS / SHORT PERUVIAN BANKS MAY 4/16 -16.5%

NEU

TRAL

EQUITY RECOMMENDATIONS

73



POSITIONS INCEPTION LEVEL

INITIATION DATE

RETURN TO DATE STOPS

FIXED-INCOME

RECEIVE KOREAN 10-YEAR SWAP RATES MAY 24/11 269 BPs

SHORT 5-YEAR INDONESIAN BONDS 5.2% MAR 20/12 9.0%

LONG SOUTH AFRICAN 10-YEAR/ SHORT 1-YEAR SWAP RATES MAR 4/15 26 BPs

RECEIVE RUSSIAN 5-YEAR SWAP RATES APR 29/15 239 BPs

LONG 10-YEAR HUNGARIAN BONDS 3.5% MAY 20/15 5.0%

RECEIVE COLOMBIAN 10-YEAR/PAY 1-YEAR SWAP RATES SEP 16/15 216 BPs

PAY MEXICAN 1-YEAR SWAP RATES DEC 2/15 91 BPs

LONG 10-YEAR POLISH BONDS 2.9% APR 6/16 -2.0%

SHORT 2-YEAR TURKISH BONDS 9.3% JUN 1/16 -2.0%

CREDIT MARKETS

SHORT EM CORPORATE AND SOVEREIGN CREDIT / LONG U.S. JUNK CORPORATE CREDIT AUG 30/11 9.0%

LONG 5-YEAR CHINESE CDS JUN 7/11 47 BPs

SHORT SOUTH AFRICAN / LONG EM SOVEREIGN CREDIT APR 10/12 4.6%

SHORT BRAZILIAN / LONG EM SOVEREIGN CREDIT MAY 15/12 16.1%

SHORT INDONESIA / LONG MEXICO SOVEREIGN CREDIT NOV 28/12 -5.1%

LONG PHILIPPINES / SHORT TURKEY SOVEREIGN CREDIT JUN 4/13 9.8%

LONG PERU / SHORT BRAZIL SOVEREIGN CREDIT AUG 21/13 14.3%

LONG EMERGING ASIA INVESTMENT GRADE / SHORT HIGH YIELD CORPORATE BONDS FEB 11/15 -6.1%

BUY SOUTH AFRICAN / SELL RUSSIAN 5-YEAR CDS PROTECTION SEP 23/14 357 BPs

SHORT PERUVIAN CORPORATE BONDS / LONG SOVEREIGN BONDS FEB 18/15 -7.9%

LONG HUNGARY / SHORT EM SOVEREIGN CREDIT MAR 4/15 -3.4%

LONG 5-YEAR BRAZILIAN CDS JUL 8/15 78 BPs

LONG MEXICO / SHORT COLOMBIA SOVEREIGN CREDIT JUL 22/15 -2.0%

LONG 5-YEAR MALAYSIAN CDS AUG 5/15 13 BPs

CURRENCIES

SHORT BRL / LONG USD 1.66 (USD/BRL) SEP 6/11 72.0%

SHORT TRY / LONG USD 1.845 (USD/TRY) JAN 17/11 44.4%

SHORT IDR / LONG USD 9155 (USD/IDR) MAR 20/12 25.4%

SHORT CLP / LONG USD 478.9 (USD/CLP) NOV 6/12 28.3%

SHORT ZAR / LONG USD 10.51 (USD/ZAR) JUL 23/14 32.1%

LONG MXN / SHORT BRL 0.18 (MXN/BRL) JAN 14/15 -7.3%

SHORT TURKISH LIRA / LONG BASKET OF JPY & EURO FEB 11/15 14.5%

SHORT COLOMBIAN PESO / LONG BASKET OF JPY & EURO APR 15/15 34.2%

LONG HUF / SHORT IDR 46.62 (HUF/IDR) APR 15/15 1.5%

LONG RUB / SHORT MYR 0.06 (RUB/MYR) NOV 25/15 -0.1%

SHORT CNY (12-MONTH NDF) / LONG USD 6.71 (USD/CNY) DEC 9/15 -2.2%

SHORT KOREAN WON / LONG BASKET OF JPY, EURO & USD MAY 25/16 1.5%

NOTE: PLEASE NOTE THAT ALL CURRENCY TRADE CALCULATIONS INCLUDE COST OF CARRY.

FIXED-INCOME, CREDIT AND CURRENCY RECOMMENDATIONS

GLOBAL OFFICES

Head Office – Montreal, Canada1002 Sherbrooke Street West, Suite 1600Montreal, Quebec, Canada H3A 3L6TEL 1.800.724.2942 (514.499.9550)FAX 1.800.843.1763 (514.843.1763) London, U.K.4-8 Bouverie StreetLondon, U.K. EC4Y 8AXTEL +44 (0)207 556 6008FAX +44 (0)207 827 6413

New York, U.S.A.225 Park Avenue South, 6th FloorNew York, NY 10003TEL 212 224 3669FAX 212 224 3861

San Francisco, U.S.A. 580 California Street16th Floor (suite 1640-41)San Francisco, CA 94104 TEL 415 568 2123

Hong Kong18/F, 248 Queen’s Road EastHong KongTEL +852 2912 8055FAX +852 2842 7007

Sydney, AustraliaLevel 19, 1 O’Connell StreetSydney, AustraliaNSW 2000TEL +61 (02) 8249 1867 TEL +61 (02) 8249 1868FAX +61 (02) 8249 1800 Cape Town, South Africa7th Floor, Mandela Rhodes PlaceCnr of Wale and Burg StreetCape Town, 8001South AfricaTEL +27 21 403 6338

São Paulo, BrazilRua Tabapuã, 422 - 4°andar - conj. 43/44 - Cep: 04533001São Paulo - SP - Brazilphone: +55 11 3074 2656 mobile: + 55 11 99484 5777

Copyright 2016, BCA Research Inc. All rights reserved.The text, images and other materials contained or displayed on any BCA Research Inc. product, service, report, e-mail or web site are proprietary to BCA Research Inc. and constitute valuable intellectual property. No material from any part of any BCA Research Inc. web site may be downloaded, transmitted, broadcast, transferred, assigned, reproduced or in any other way used or otherwise disseminated in any form to any person or entity, without the explicit written consent of BCA Research Inc. All unauthorized reproduction or other use of material from BCA Research Inc. shall be deemed willful infringement(s) of BCA Research Inc. copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. BCA Research Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. BCA Research Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.Non-residents of Canada confirm that they do not, and have never had the right to use any of BCA Research Inc.’s materials in Canada, and agree that they have not and never will use any of the materials in Canada unless they acquire this right by paying the applicable Canadian and Quebec sales taxes. All unauthorized use of the materials in Canada shall be deemed willful infringement of BCA Research Inc. copyright and other proprietary and intellectual property rights.While BCA will use its reasonable best efforts to provide accurate and informative Information Services to Subscriber, BCA cannot guarantee the accuracy, relevance and/or completeness of the Information Services, or other informa-tion used in connection therewith. BCA, its affiliates, shareholders, directors, officers, and employees shall have no liability, contingent or otherwise, for any claims or damages arising in connection with (i) the use by Subscriber of the Information Services and/or (ii) any errors, omissions or inaccuracies in the Information Services. The Information Services are provided for the benefit of the Subscriber. It is not to be used or otherwise relied on by any other person.Some of the data contained in this publication may have been obtained from Thomson Reuters; Bloomberg; CEIC data; Real Capital Analytics, Inc.; S&P Capital IQ; Reis Services, LLC; CBRE, Inc.; Barclays or from Standard and Poor’s (“S&P”). Copyright © 2016 The McGraw-Hill Companies, Inc., S&P is a division of The McGraw-Hill Companies, Inc. All rights reserved.As well, some of the data contained in this publication may have been obtained from MSCI Inc. Neither MSCI Inc. nor any other party involved in or related to compiling, computing or creating the MSCI Inc. data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI Inc., any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI Inc. data is permitted without MSCI Inc.’s express written consent.

Important DisclaimerBCA Research’s publications do not constitute an offer to sell any security, nor a solicitation of an offer to buy any security. Only a prospectus may be used to offer to sell or purchase securities, and a prospectus must be read and considered carefully before investing or spending money.BCA Research’s publications are designed to provide information and analysis that BCA believes to be accurate, but it is published with the understanding that neither the author nor the publisher is rendering investment advice, nor offering individualized advice tailored to any specific portfolio or to any individual’s particular needs, nor offering professional services such as legal or accounting advice. Anyone needing assistance in areas that include invest-ment, legal, and accounting advice should consult a competent professional’s services.BCA Research’s publications may reference historical performance data. Past results do not guarantee future per-formance. Additionally, business conditions, laws, regulations, and other factors affecting performance all change over time, which could change the status of the information in this publication.This communication reflects our analysts’ opinions as of the date of this communication and will not necessarily be updated as views or information change. BCA or its affiliated companies or their respective shareholders, directors, officers and/or employees, may have long or short positions in the securities discussed herein and may purchase or sell such securities without notice.For important copyright, disclosure, disclaimer, and other information, including limitations on BCA’s liability, see our terms and conditions, available here: http://www.bcaresearch.com/copyright.

http://www.bcaresearch.com/copyright

emerging markets and latin america: new lows ahead? …

Documents