{"id":110933,"date":"2009-12-29T07:04:42","date_gmt":"2009-12-29T12:04:42","guid":{"rendered":"http:\/\/www.businessinsider.com\/rbc-heres-how-to-make-a-killing-in-emerging-markets-in-2010-2009-12"},"modified":"2009-12-29T07:04:42","modified_gmt":"2009-12-29T12:04:42","slug":"rbc-heres-how-to-make-a-killing-in-emerging-markets-in-2010","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/110933","title":{"rendered":"RBC: Here&#8217;s How To Make A Killing In Emerging Markets In 2010"},"content":{"rendered":"<p><em>(This guest post originally appeared at the <a href=\"http:\/\/pragcap.com\/rbcs-top-emerging-market-trades-for-2010\">author&#8217;s blog<\/a>)<\/em><\/p>\n<p>RBC recently released their 20 favorite trades for 2010.&nbsp; <a href=\"http:\/\/pragcap.com\/rbcs-2010\" >As we previously mentioned<\/a>, RBC is relatively bullish though they are viewing the upcoming year as two different investment environments.&nbsp;&nbsp; They see overall fundamentals improving and the first half of 2010 serving as a period of &ldquo;catch-up&rdquo; for investors.&nbsp; That should change heading into the back half of the year as investors become more defensive.&nbsp; Based on this macro outlook RBC provides their 10 favorite trades for 2010:<\/p>\n<ul>\n<li>Argentina external debt steepeners (Long Boden 2012&rsquo;s \/ Short US$ 2033 Discounts)<\/li>\n<\/ul>\n<p>Actionable only for sophisticated investors with foreign access.&nbsp; The Argentine holdout debt restructuring is likely to conclude in 2010.&nbsp; The holdout-debt-swap is likely to result in underperformance of the long end of the curve, given that most of the resulting debt is expected to be issued in discounts.<\/p>\n<ul style=\"padding-left: 30px;\">\n<li> Long Brazil \/ Short Venezuela 5yr CDS<\/li>\n<\/ul>\n<p><a href=\"http:\/\/pragcap.com\/goldmans-top-trades-for-2010\" >Similar to Goldman&rsquo;s Ireland\/Spain trade<\/a>.&nbsp; RBC believes Brazil is priced for perfection and investors are too bearish on Venezuela.<\/p>\n<ul style=\"padding-left: 30px;\">\n<li> Mexico TIIE 2s-10s flattener<\/li>\n<\/ul>\n<p>The Mexican Central Bank is likely to hike rates by Q210 as inflation fears increase.<\/p>\n<ul style=\"padding-left: 30px;\">\n<li> Long MXN\/COP<\/li>\n<\/ul>\n<p>As Mexico recovers their lagging currency is likely to outperform in 2010.&nbsp; Valuation and weak economic outlook in Columbia makes it a nice pairing.<\/p>\n<ul style=\"padding-left: 30px;\">\n<li> Short EUR\/PLN<\/li>\n<\/ul>\n<p>Poland now looks cheap compared to the Euro.&nbsp; Proactive rate action and better than expected economic growth<a href=\"http:\/\/pragcap.com\/rbcs-top-emerging-market-trades-for-2010#\" ><\/a> should help the rally in PLN continue.<\/p>\n<ul style=\"padding-left: 30px;\">\n<li> Short USD\/RUB<\/li>\n<\/ul>\n<p>Strong oil demand, better than expected economic growth and valuation make RUB attractive.<\/p>\n<ul style=\"padding-left: 30px;\">\n<li> Short USD\/ZAR<\/li>\n<\/ul>\n<p>The rand looks attractive for similar reasons mentioned in other EM currencies.&nbsp; Proactive rate action, better than expected economic growth and attention on South Africa during the 2010 World Cup make this an attractive play.<\/p>\n<ul style=\"padding-left: 30px;\">\n<li> Sell 12-month USD\/CNY NDFs<\/li>\n<\/ul>\n<p>Yuan revaluation is only a matter of time&hellip;.<\/p>\n<ul style=\"padding-left: 30px;\">\n<li> Short USD\/KRW<\/li>\n<\/ul>\n<p>The rebound in China and Asia should help boost Korea.&nbsp; RBC sees rates rising 150 bps in 2010.&nbsp; This pairs works favorably with the dollar.<\/p>\n<ul style=\"padding-left: 30px;\">\n<li> Long EM high-yield vs. high-grade corporate debt<\/li>\n<\/ul>\n<p>From RBC:<\/p>\n<p style=\"padding-left: 30px;\">As the global economic recovery gains momentum, risks in the high yield corporate segment will decline driven by rising revenues and cash flows, which will help ease refinancing needs.&nbsp; Rather than pairing EM high yielders with sovereigns which offer a similar scope for spread compression, we elected to pair them with high grade corporates because this pairing offers a better hedge against sell-offs, and we believe it is possible that we could witness other Dubai like-events in 2010.<\/p>\n<p><a href=\"http:\/\/www.businessinsider.com\/rbc-heres-how-to-make-a-killing-in-emerging-markets-in-2010-2009-12#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><b>See Also:<\/b><\/p>\n<ul>\n<li><a href=\"http:\/\/www.businessinsider.com\/rbc-beware-a-double-dip-and-a-disorderly-collapse-of-the-us-dollar-in-the-second-half-of-2010-2009-12\">RBC: Beware A Double Dip, And A Disorderly Collapse Of The US Dollar In The Second Half Of 2010<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/rbs-look-to-brazil-for-growth-opportunities-2009-12\">RBS: Red-Hot Brazil Is Still Blowing Away Expectations<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/venezuela-the-worlds-highest-inflation-2009-10\">Venezuela&#8217;s 28% Inflation Is The Highest In The World<\/a><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/MOkvvulzO_0\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This guest post originally appeared at the author&#8217;s blog) RBC recently released their 20 favorite trades for 2010.&nbsp; As we previously mentioned, RBC is relatively bullish though they are viewing the upcoming year as two different investment environments.&nbsp;&nbsp; They see overall fundamentals improving and the first half of 2010 serving as a period of &ldquo;catch-up&rdquo; [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-110933","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/110933","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=110933"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/110933\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=110933"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=110933"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=110933"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}