Major Equity Indices Drawdown (Since 2016 US Elections) US ... · 5/14/2019 · Major Equity Indices Drawdown (Since 2016 US Elections) % % ... could decline by almost 0.4 pps in
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See page 14 for disclosures and analyst certification
1
0
100
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500
600
0
20
40
60
80
100
120
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160
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Exports (left, 12m rolling sum)
Imports (right, 12m rolling Sum)
Source: NBG Research, Bloomberg, US Census Bureau, 12-month rolling sum figures
US Imports from and Exports to China
$bn $ bn
-25
-20
-15
-10
-5
0
-25
-20
-15
-10
-5
0
No
v-1
6
Jan
-17
Mar
-17
May
-17
Jul-
17
Sep
-17
No
v-1
7
Jan
-18
Mar
-18
May
-18
Jul-
18
Sep
-18
No
v-1
8
Jan
-19
Mar
-19
May
-19
S&P500 MSCI ACWI ($)
Source: NBG Research, Bloomberg, Drawdown = % Deviation from Market Top/High Level
Major Equity Indices Drawdown (Since 2016 US Elections)
%%
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
N A T I O N A L B A N Κ
O F G R E E C E
Ch
art
s o
f th
e w
ee
k
Global Markets Roundup
National Bank of Greece | Economic Research Division | May 14, 2019
US-China trade talks continue, but new tariffs take effect, hurting investors’ risk appetite
Ilias TsirigotakisAC
Head of Global
Markets Research
210-3341517
tsirigotakis.hlias@nbg.gr
Panagiotis Bakalis
210-3341545
mpakalis.pan@nbg.gr
Lazaros Ioannidis
210-3341207
ioannidis.lazaros@nbg.gr
Vasiliki Karagianni
210-3341548
karagianni.vasiliki@nbg.gr
Table of Contents
Overview_p1
Economics & Markets_p2,3 Asset Allocation_p4
Outlook_p5,6
Forecasts_p7 Event Calendar_p8
Markets Monitor_p9
ChartRoom_p10,11
Market Valuation_p12,13
The US increased tariffs to 25% (from 10% previously) on $200bn worth of Chinese goods imports,
on last Friday, following no decisive progress on trade discussions. Recall that the US already
imposes a 25% levy on $50bn worth of Chinese imports (that mostly include capital and
intermediary goods). Importantly, the office of the USTR announced it will begin formal procedures
to examine new tariffs on an additional $300bn worth of imports. The latter, if materialized, would
mostly hit US consumer products manufactured in China and shipped back to the US, potentially
weakening US private consumption.
China retaliated on Monday, by raising tariffs (to 5%-25% from 5%-10%) on circa $60bn worth of US
goods, which will come into effect from June 1st. Overall, China has imposed tariffs on about $110bn
worth of US products out of total imports of circa $120bn. Vice Premier Liu suggested some points
in the negotiations might be harder to agree to (e.g. IP, tech transfer).
Markets reacted negatively to the news of additional tariffs, with global equities declining by 2.6%
wow (MSCI ACWI) and by -1.9% on Monday. Corporate bond spreads widened (USD Speculative
Grade: +29bps to 401), while safe-haven assets rallied (10Yr USTs: -6bps to 2.47%). However,
negotiations continued in Washington in the past week, signaling the willingness of both sides to
avoid an all-out trade war.
We outline three possible scenarios for global growth, based on various trade outcomes. The first,
and the most favorable, outcome would be an early trade agreement (reports suggest President
Trump could meet with President Xi at the G20 summit in Japan, June 28-29). However, even such
an outcome would not immediately result in the reversal of tariffs (implemented so far).
Nevertheless, global real GDP growth would remain close to trend and the fundamental backdrop
for equities would remain supportive (see page 3 for S&P500 EPS revisions turning positive for the
first time since December 2018), alongside the dovish turn by central banks.
The second outcome could be a gradual escalation in trade tensions, similar to 2018, with China
responding in a “tit-for-tat” manner. As the margin for imposing new tariffs appears limited, Chinese
officials could seek to support growth instead (e.g. additional stimulus or a lower yuan FX rate). Less
probable options include the reduction of UST holdings (circa $1.1 tn or 7% outstanding of
marketable US Government securities) or the backtracking from promised product purchases (US
soybeans). A prolonged period of uncertainty (despite the potential for compromise down the road)
poses significant downside risks to global GDP growth and risk appetite.
The third (but least likely) outcome could be an increase in tariffs by both sides and/or other
outright aggressive measures that would hurt global growth and risk a recession. Policy responses
could include monetary and/or fiscal easing to offset the negative impact of a trade war, while
growth prospects would be damaged further, since most economic projections currently do not
incorporate an increase in tariffs. Some estimates (IMF, October 2018) suggest world GDP growth
could decline by almost 0.4 pps in the long run in the event of a full-blown trade war. Investors will
rush to safe haven assets (JPY – see page 3 Graph 3), with core Government bond yields likely to
slide even further.
N A T I O N A L B A N Κ
O F G R E E C E
NBG Global Markets Roundup | Economics & Markets Section
National Bank of Greece | Economic Research Division | Global Markets Analysis
2
US bank lending standards recorded mixed changes in
Q1:2019, while loan demand weakened
The Fed’s Senior Loan Officer Opinion Survey (SLOOS) for
Q1:19 suggests mixed changes in banks’ credit standards for
loans to corporates and a slight loosening for most categories
of loans to households. Regarding corporates, lending standards
for commercial and industrial (C&I) loans loosened modestly (4%
of banks for large and middle corporates), following a slight
tightening in the previous quarter (3% of banks) and a substantial
loosening from Q1:17 to Q3:18 (a net percentage of 10% of banks,
on average, eased standards in that period). According to the
respondents, the major easing effect came from increased
competition. On the other hand, standards for commercial real
estate (CRE) loans tightened across sub-categories (construction
and land development, non-farm non-residential, multi-family).
Regarding households, credit standards for mortgage loans
loosened slightly in Q1:19, while they were broadly unchanged
across consumer loan categories (credit cards, auto loans and
other consumer loans), with the exception of credit cards (where
they tightened).
On the demand side, credit appetite was reported to have
weakened notably for all loan categories. As far as C&I loans are
concerned, according to respondents, the major factors containing
demand (-17% for large and middle corporates, the weakest survey
outcome since Q4:09) were: i) reduced appetite for business
investment; ii) lower financing needs for mergers and acquisitions;
and iii) a shift in borrowing to other sources. Regarding the latter,
recall that according to the Securities Industry and Financial
Markets Association (SIFMA), US corporates issued $388 bn worth
of bonds in Q1:19, compared with $224 bn in Q4:18. It should also
be noted, however, that actual data by commercial banks
suggested that C&I loans continued to expand at a strong pace
during Q1:19, by circa 10% yoy.
US inflation slightly below expectations in April
Headline CPI accelerated by 0.1 pp to 2.0% yoy in April,
modestly below consensus estimates for 2.1% yoy. More
importantly, the monthly pace of growth for core CPI was soft for a
3rd consecutive month, at +0.14% mom (+0.13% mom, on average,
in the past three months versus an average of +0.18% mom since
2018 | consensus for +0.2% mom). The annual pace of growth for
core CPI was 2.1% yoy in April, accelerating by 0.1 pp compared
with March, albeit just barely (on a two-decimal basis it stood at
2.06% yoy in April, versus 2.04% yoy in the previous month). Recall
that at its meeting on May 1st, the Fed acknowledged the soft
patch of inflation in recent months, albeit expecting it to prove
transitory. Note that the PCE deflator in March (the Fed’s preferred
measure for gauging inflationary pressures) stood at 1.5% yoy and
the core figure at 1.6% yoy.
The European Commission downgraded moderately its
estimate for 2019 euro area GDP
The EC reduced further its forecast for euro area GDP growth
in 2019, to 1.2% yoy, compared with a projection of 1.3% yoy
three months ago and 1.9% yoy six months ago. The lower
estimates are due to a combination of external (slower global
growth and weaker global trade in view of the US protectionism
shift) and domestic factors. Regarding the latter, the EC reiterated
that part of them are of temporary nature and country-specific
(e.g. social unrest in France,
political uncertainty in Italy). Nevertheless, the EC also noted that
some structural factors may also be at play, especially regarding
the autos sector. Specifically, although part of the weakness in the
aforementioned sector was likely temporary due to the adjustment
of producers to the new emission testing regime (Worldwide Light
Vehicle Test Procedure), the car industry also faces more structural
challenges. These include, inter alia, the gradual shift of consumer
preferences away from cars using fossil fuel technologies (e.g.
diesel cars, the specialty of European and more specifically German
automakers), combined with the regulatory regime increasingly
favoring cleaner forms of energy (e.g. electric cars). Finally, the EC
views mainly downside risks to the outlook for euro area GDP,
including a potential further escalation of trade tensions (notably,
the EC forecasts do not incorporate the latest round of US – China
tariff increases), a sharper-than-expected slowdown in China and
increased domestic political uncertainty.
UK real GDP growth accelerated in Q1:2019
GDP growth in Q1:19 accelerated to +0.5% qoq (+1.8% yoy),
compared with +0.2% qoq (+1.4% yoy) in Q4:18. The headline
outcome was in line with consensus estimates, albeit the
composition of growth was somewhat more positive than
anticipated. Indeed, although both consensus and the Bank of
England (May Inflation Report) expected a substantial boost from
stockpiling, a development that could act as a headwind for GDP in
Q2:19, actual data did not confirm that view, as inventories added
a modest 0.1 pp in overall GDP growth. Instead, private
consumption was the main driver of overall growth (+0.4 pps to
the headline outcome), increasing by a robust +0.6% qoq, as it
benefited from increased household purchasing power. Recall that
nominal wage growth was c. +3.5% yoy, on average in Q1:19, well
above the respective trend for inflation (+1.9% yoy). Meanwhile,
business investment rose by 0.5% qoq in Q1:19 (+0.05 pps
contribution), following four consecutive quarterly declines during
2018 (of -0.6% qoq on average) and exceeding by a wide margin
consensus estimates for -0.7% qoq. The remaining GDP
components (government spending, residential investment, net
exports, acquisitions less disposals of valuables) recorded mixed
changes and had largely offsetting impacts on headline growth.
China: weaker-than-expected credit expansion in April
The pace of credit growth, as measured by total social
financing (TSF), moderated in April, by 0.3 pps to 10.4% yoy.
Both mainstream bank loan growth and “shadow banking”
(comprising mainly acceptance bills, entrusted loans) slowed (-0.3
pps to +13.4% yoy & -0.9 pps to -10.9% yoy, respectively). The
latest deceleration was likely due to central policy turning
somewhat less dovish, following better-than-expected GDP growth
in Q1:19 (6.4% yoy versus consensus estimates for 6.3% yoy), as
well as stronger-than-anticipated sequential economic activity in
March. Nevertheless, immediately after the US announced the
intention to increase tariffs on imports from China, the People’s
Bank of China (PBoC) announced (on May 6th) a reduction in the
Required Reserve Ratios (RRR) of specific small banks to 8%. The
announcement did not clarify the current RRR of targeted banks,
but according to the PBoC, the latest move will release RMB 280bn
of liquidity to the banking system. Although such a liquidity
injection is modest (0.3% of GDP), it could prove a precursor of
policy support reinvigorating, especially if trade tensions with the
US escalate further.
N A T I O N A L B A N Κ
O F G R E E C E
NBG Global Markets Roundup | Economics & Markets Section
National Bank of Greece | Economic Research Division | Global Markets Analysis
3
Quote of the week: “We don’t see yet feedback or the
transmission of these higher nominal wages growth into a
higher inflation. It’s taking longer… we know that it’s a
matter of being patient and persistent with the
accommodative monetary policy and it will come, it will
happen”, President of the European Central Bank, Mario
Draghi, May 8th 2019.
Equities
Global equity markets recorded strong losses in the past week, following
the implementation of a tariff hike by the US on $200bn worth of Chinese
imports. The MSCI ACWI index was down by 2.6% wow, with both emerging
and developed markets recording substantial losses (EM: -4.6 %, DM:-2.4%). The
S&P500 fell by 2.2% wow, with Technology (-3.6%) and Banks (-3.2%) leading
the decline, with the latter hurt by falling US Treasury bond yields. However, the
fundamental backdrop for equities remains strong (assuming that a trade war is
avoided). Indeed, regarding the earnings season, out of the 456 companies that
have reported results so far, circa 75% have exceeded analyst estimates. Note
that analyst expectations for EPS growth in Q1:19 stand at -0.5% yoy (-4.1% at
the beginning of the earnings season) from +13.4% in Q4:2018 and +20% yoy in
2018 (estimates for +3.5% yoy in 2019). Furthermore, EPS revisions (number of
companies with upward 12-month forward earnings revisions minus number of
companies with downward revisions divided by the total number of companies),
have turned positive for the first time since December 2018 (see graph). On the
other side of the Atlantic, the Eurostoxx fell by 3.6% wow, with the Autos sector
underperforming (-6.8% wow). In China, CSI 300 fell by 4.7% wow, albeit it
recovered some of its losses on Friday (+3.6%), as US-China trade talks continue.
However, on Monday, Chinese equities fell by -1.7%, as China announced that it
will impose retaliatory tariffs.
Fixed Income Government bond yields declined in the past week, due to increased safe
haven demand, following the escalation of the trade war. Specifically, US
Treasury 10-year yields fell by 6 bps to 2.47%, while their 2-year counterpart was
down by 7 bps wow to 2.27%. In Europe, the German 10-year Bund yield, fell by
7 bps to -0.05%, the lowest level in a month, while the UK’s 10-year Gilt yield fell
by 8 bps to 1.14% as Brexit uncertainty remains. In Italy, the 10-year yield rose
by 12 bps wow to 2.68% (the highest level in 2 months) and the yield spread
over Bund rose by 19 bps wow to 273 bps as risk aversion increased due to
infighting within Italy’s ruling coalition and a warning from the European
Commission on public finances. Corporate bond spreads widened in the past
week, amid higher risk aversion following negative headlines, on: i) US-China
trade; ii) Italy; and iii) the Iran and North Korea weapons programs. Specifically,
in the HY spectrum, both US and euro area spreads increased by 29 bps to 401
bps and 402 bps, respectively. In the investment grade spectrum, spreads were
up by 4 bps to 122 bps in the US and by 9 bps to 118 bps in the euro area.
FX and Commodities In foreign exchange markets, the British Pound lost ground, amid signs
that Brexit negotiations between the ruling Conservative and opposition
Labour parties may collapse. The better-than-expected GDP data provided
little support. Overall, the British Pound was down by 1.3% wow against the US
dollar to $1.300 and by 1.6% wow against the euro to €/0.864. The Japanese yen
gained ground on a weekly basis (+1.0% against the USD to ¥109.95), supported
by increased safe haven demand.
In commodities, oil prices were little changed in the past week, as US-China
trade tensions overshadowed tightened global supplies (continuing
production cuts by the OPEC+ and US sanctions on Iran and Venezuela). Note
that, according to IEA, US and China account for 34% of global oil consumption
and escalating trade tensions could dent global oil demand growth. Meanwhile,
oil inventories in the US declined by -4 million barrels to 467 million barrels for
the week ending May 3rd. Overall, the WTI fell by 0.5% wow to $61.7/bbl (+36%
ytd) and Brent rose by 0.5% wow to $71.6/bbl (+35% ytd).
92
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100
102
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106
92
94
96
98
100
102
104
106
Jun
-18
Jul-
18
Au
g-1
8
Sep
-18
Oct
-18
No
v-1
8
Dec
-18
Jan
-19
Feb
-19
Mar
-19
Ap
r-1
9
May
-19
Gold Yen CHF US Government Bond (7-10Y)
Source: NBG Research, Bloomberg
Safe-haven Assets Performance
January 2019 = 100
Graph 3.
Graph 2.
-30
-20
-10
0
10
20
30
40
50
60
-30
-20
-10
0
10
20
30
40
50
60
J-17
M-1
7
M-1
7
J-17
S-17
N-1
7
J-18
M-1
8
M-1
8
J-18
S-18
N-1
8
J-19
M-1
9
M-1
9
3-month average 1-month average %%
S&P500 12-month forward EPS Revisions
Source: NBG Research, Bloomberg, EPS Revisions = Number of Companies with Upwards Revisions-Number of Companies with Downward Revisions / Total
>0 : More Companies with Upward Earnings Revisions
<0 : More Companies with Downward Earnings Revisions
Graph 1.
1,20
1,25
1,30
1,35
1,40
1,45
1,50
1,55
1,600,70
0,74
0,78
0,82
0,86
0,90
0,94
Jan
-15
Ap
r-15
Jul-
15
Oct
-15
Jan
-16
Ap
r-16
Jul-
16
Oct
-16
Jan
-17
Ap
r-17
Jul-
17
Oct
-17
Jan
-18
Ap
r-18
Jul-
18
Oct
-18
Jan
-19
Ap
r-19
EUR/GBP (inverted, left) GBP/USD (right)
Source: NBG Research, Bloomberg
£/$€/£
GBP depreciates
British Pound
NBG Global Markets Roundup | Asset Allocation
National Bank of Greece | Economic Research Division | Global Markets Analysis
4
N A T I O N A L B A N Κ
O F G R E E C E
GovernmentBonds
CorporateBonds
Cash
Equities
Commodities OW
UW
OW
Assets MW
Equities
US
Euro Area
Japan
UK
Emerging Markets
Government Bonds
US Treasury Bonds
US TIPs
German Bund
Sterling Gilt
Japan GBs
Corporate Bonds
USD Corp IG
USD Corp HY
EUR Corp IG
EUR Corp HY
Commodities
Crude Oil
Gold
Cash
UnderWeight OverWeight
Max OverWeight
Max UnderWeight
Market Weight
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 1% 3% 4% 5% 6% 8% 9% 10%12%13%14%16%17%
US_EQ
EA_EQ
JP_EQ
UK_EQ
EM_EQ
USTs
USTIPs
GBUNDS
UKGILTS
JGBS
USDIG
USDHY
EURIG
EURHY
OIL
GOLD
CASH
Stand. Deviation (Ann.)
OptimalRisky Portfolio (Highest Sharpe Ratio, No Cash Allocation)
(1) Figure1: Green (red) color arrows suggest an increase (decrease) in relative asset class weights over the last week (Tactical Asset Allocation tilits
vs our Strategic Asset Allocation portfolio).
(2) Figure2: The orange/light blue circles of the chart displays current asset class and intra-asset class tilts relative to the Strategic Asset Allocation
portfolio. Black arrows point to an increase/decrease, if any, relative to previous allocations.
(3) UW|MW|OW: Underweight | Marketweight | Overweight Tactical Asset Allocation (TAA) relative to our Strategic Asset Allocation portfolio.
Figure2. NBG Global Portfolio TAA Tilts: LEVEL 2
NBG Global Portfolio Tactical Asset Allocation (TAA)
Equities: With the Fed (and other CBs) making a dovish pivot and global
growth stabilizing, risk premia could decline further supporting some
upside near-term. Valuations have increased significantly since market’s
bottom by 2x, with the MSCI DM P/E ratio at 15.6x vs a 15-y average of
14.2x, albeit remain below of January 2018 peak (17.3x). Moreover, 12-
month forward EPS revisions of consensus expectations (albeit still
negative) are improving. As a result, we remain slightly overweight
relative to a Strategic Asset Allocation (SAA) benchmark of 60-30-10,
which is categorized as a moderate to moderate aggressive portfolio with
AR of 7% and STDEV of 10% based on 15-year history (Cash position:
Equalweight). Intra-class, positioning (since late November) continues in
favor of Emerging Markets reflecting the stabilization of the USD, the
prospect of a US-China trade deal and growth-friendly policy measures by
the Chinese Government. However, US-China trade war tail risks has re-
emerged recently (May 5th) creating uncertainty and hurting the relative
trade, alongside local themes (Turkey). Moreover, we continue to hold a
small tactically tilt towards SXXE as extremely low Bund yields increase the
risk-bearing capacity of investors (SXXE 12-month P/E 13.7x @ 71% 15-
year percentile vs 17.0x @ 77% for the SPX).
Government Bonds: For the first time in many years, higher yields (lower
prices) do not form our baseline scenario with many degrees of certainty.
The Fed is expected to pause and UST yields may have peaked for this
cycle at 3.25% as long as inflation pressures are modest. German Bunds
and UK Gilts yields, however, have upside assuming euro area growth
stabilizes and Brexit negotiations conclude with some form of deal.
Overall, underweight in Govies. Intra-class, we hold relative positions
that can alleviate portfolio losses (e.g. OW USTs due to higher coupons)
assuming that prices continue to increase.
Credit: We turned broadly neutral in Corporate Bonds holding a more
constructive tactical view. Trade risks are fading and the Fed has adopted
a more dovish stance implying fewer (if any) interest rate hikes in 2019-
2020, a supportive factor for corporate fundamentals. We retain a neutral
view intra-class and cross-currency. Medium-term, however, Quantitative
Tightening (ECB), deteriorating Debt-Service-Ratios and Quality (BBB
issues are 50% of IG indices vs 20% pre-QE) and the eventual turn of
economic cycle will weigh on spreads and returns.
Figure1. NBG Global Portfolio TAA Tilts: LEVEL 1
Figure3. Efficient Portfolio Allocation for Various
Volatility Levels
NBG Global Markets Roundup | NBG 12-Month View & Key Factors for Global Markets
National Bank of Greece | Economic Research Division | Global Markets Analysis
5
N A T I O N A L B A N Κ
O F G R E E C E
Eq
uit
y M
ark
ets
G
overn
men
t B
on
ds
Fo
reig
n E
xch
an
ge
US Euro Area Japan UK
Reduced short-term tail
risks
Higher core bond yields
Current account surplus
▬ Sluggish growth
▬ Deflation concerns
▬ The ECB’s monetary
policy to remain extra
loose (Targeted-LTROs,
ABSs, covered bank
bond purchases,
Quantitative Easing)
Tax cuts may boost growth,
and interest rates through a
more aggressive Fed
Safe-haven demand
▬ Fed on a “Wait-and-see”
mode at least in H1:2019
▬ Protectionism and trade
Wars
▬ Mid-2018 rally probably out
of steam
Safe haven demand
More balanced economic
growth recovery (long-
term)
Inflation is bottoming out
▬ Additional Quantitative
Easing by the Bank of
Japan if inflation does not
approach 2%
Transitions phase
negotiations
The BoE is expected to
increase short-term policy
rates assuming WA deal
▬ Sizeable Current account
deficit
▬ Elevated Policy
uncertainty to remain due
to the outcome of the
Referendum and the
negotiating process
Valuations appear
excessive compared
with long-term
fundamentals
ECB exits, albeit slowly,
net QE (flow effect)
▬ Political Risks
▬ Fragile growth outlook
▬ Medium-term inflation
expectations remain
low
▬ ECB QE “stock” effect
Valuations appear rich with
term-premium close to 0%
Underlying inflation
pressures
Balance sheet reduction,
albeit well telegraphed may
push term premia higher
▬ Global search for yield by
non-US investors continues
▬ Safe haven demand
▬ Fed on a “Wait-and-see”
mode at least in H1:2019
Elevated Policy
uncertainty to remain due
to the outcome of the
Brexit negotiating process
Inflation overshooting due
to GBP weakness feeds
through inflation
expectations
The BoE is expected to
increase short-term policy
rates assuming WA deal
▬ Slowing economic growth
post-Brexit
Sizeable fiscal deficits
Restructuring efforts to
be financed by fiscal
policy measures
▬ Safe haven demand
▬ Extremely dovish
central bank
▬ Yield-targeting of 10-
Year JGB at around 0%
Still high equity risk
premium relative to other
regions
Credit conditions gradual
turn more favorable
Small fiscal loosening in
2019
▬ 2019 EPS estimates may
turn pessimistic due to
plateuning economic
growth
▬ Political uncertainty (Italy,
Brexit) could intensify
Fiscal loosening will support
the economy & companies’
earnings
Solid EPS growth in 2018 &
strong in 2019
Cash-rich corporates will
lead to share buybacks and
higher dividends (de-
equitization)
▬ Peaking profit margins
▬ Protectionism and trade
wars
Still aggressive QE and “yield-
curve” targeting by the BoJ
Upward revisions in corporate
earnings
▬ Signs of policy fatigue
regarding structural reforms
and fiscal discipline
▬ Strong appetite for foreign
assets
▬ JPY appreciation in a risk-off
scenario could hurt exporters
65% of FTSE100 revenues
from abroad
Undemanding valuations
in relative terms
High UK exposure to the
commodities sector
assuming the oil rally re-
emerges
▬ Elevated Policy
uncertainty to remain due
to the outcome of the
Brexit negotiating process
Neutral Neutral/Positive Neutral
Slightly higher yields
expected
Higher yields expected
Stable yields expected
Higher yields expected but
with Brexit risk premia
working on both directions
Broadly Flat EUR
against the USD with
upside risks towards
$1.18
Neutral/Negative
Higher GBP expected but
with Brexit risk premia
working on both directions
Broadly Flat USD
against the EUR with
upside risks towards
$1.18
Slightly higher JPY
NBG Global Markets Roundup | NBG 12-Month View & Key Factors for South Eastern European Markets
National Bank of Greece | Economic Research Division | Global Markets Analysis
6
N A T I O N A L B A N Κ
O F G R E E C E
Turkey Romania Bulgaria Serbia
Emerging Markets Research, Head: Dr. Michael Loufir, tel:210-3341211, email: mloufir@nbg.gr
Fo
reig
n D
eb
t
Attractive valuations
▬ Weak foreign investor
appetite for emerging
market assets
▬ Persisting domestic
financial crisis
Strong economic activity
Attractive valuations
▬ Weak foreign investor
appetite for emerging
market assets
Attractive valuations
Low-yielding domestic
debt and deposits
▬ Weak foreign investor
appetite for emerging
market assets
Attractive valuations
▬ Weak foreign investor
appetite for emerging
market assets
Eq
uit
y M
ark
ets
D
om
est
ic D
eb
t Fo
reig
n D
eb
t Fo
reig
n E
xch
an
ge
Turkey Romania Bulgaria Serbia
Low public debt-to-GDP
ratio
▬ Loosening fiscal stance
▬ Stubbornly high inflation
▬ Persisting domestic
financial crisis
Low public debt-to-GDP
ratio
▬ Easing fiscal stance
▬ Envisaged tightening in
monetary policy
Very low public debt-to-
GDP ratio and large fiscal
reserves
Positive inflation outlook
Policy Coordination
Instrument with the IMF
Restored fiscal and public
debt sustainability
Acceleration in economic
activity
▬ Large public sector
borrowing requirements
High foreign debt yields
▬ Sizeable external
financing requirements
▬ Weak foreign investor
appetite for emerging
market assets
▬ Persisting domestic
financial crisis
▬ Large external financing
requirements
▬ Heightened domestic
political uncertainty
Solidly-based currency
board arrangement, with
substantial buffers
Current account surplus
▬ Large external financing
requirements
Ongoing EU membership
negotiations
Policy Coordination
Instrument with the IMF
▬ Sizable external financing
requirements
▬ Reinvigorated progress in
structural reforms
Currency board
arrangement
Large foreign currency
reserves and fiscal
reserves
Current account surplus
▬ Sizable external financing
requirements
▬ Heightened domestic
political uncertainty
High domestic debt yields
▬ Sizable external financing
requirements
▬ Weak foreign investor
appetite for emerging
market assets
▬ Persisting geopolitical risks
and domestic financial crisis
▬ Escalating global trade war
▬ Large external financing
requirements
▬ Heightened domestic
political uncertainty
Ongoing EU membership
negotiations
Policy Coordination
Instrument with the IMF
Large FDIs
▬ Sizable external financing
requirements
Neutral/Positive Neutral/Positive Neutral/Positive Neutral/Positive
Stable to lower yields Stable to lower yields Stable to higher yields Stable to lower yields
Stable to narrowing
spreads
Stable to narrowing
spreads
Stable to narrowing
spreads
Weaker to stable TRY
against the EUR
Stable BGN against the
EUR
Stable to widening
spreads
Weaker to stable RON
against the EUR
Stable to stronger RSD
against the EUR
NBG Global Markets Roundup | Economic & Markets Forecasts
National Bank of Greece | Economic Research Division | Global Markets Analysis
7
N A T I O N A L B A N Κ
O F G R E E C E
Economic Indicators Stock Markets (in local currency)
2015 2016 2017 2018 2019f 2020f
Real GDP Growth (%) Country - Index
Turkey 6,1 3,2 7,4 2,6 -1,2 2,0 Turkey - ISE100 86.283 -7,2 -4,6 -9,2
Romania 3,9 4,8 7,0 4,1 3,8 3,4 Romania - BET-BK 1.565 -1,3 7,5 -2,2
Bulgaria 3,5 3,9 3,8 3,1 3,6 3,2 Bulgaria - SOFIX 567 -0,7 -4,6 -13,4
Serbia 1,8 3,3 2,0 4,3 3,6 3,8 Serbia - BELEX15 733 -1,4 -3,8 0,9
Headline Inflation (eop,%)
Turkey 8,8 8,5 11,9 20,3 16,5 12,5
Romania -0,9 -0,5 3,3 3,3 3,8 3,2 1-m Money Market Rate (%)
Bulgaria -0,4 0,1 2,8 2,7 2,9 2,7 Turkey 26,0 24,0 22,0 19,5
Serbia 1,5 1,6 3,0 2,0 1,8 2,0 Romania 3,1 3,0 3,0 3,0
Bulgaria(*) 0,0 0,0 0,0 0,1
Current Account Balance (% of GDP) Serbia 2,6 2,7 2,8 3,0
Turkey -3,7 -3,8 -5,6 -3,6 -1,2 -2,5 Currency
Romania -1,2 -2,1 -3,2 -4,7 -5,2 -5,5 TRY/EUR 6,80 6,75 6,70 6,80
Bulgaria 0,0 2,6 6,5 4,6 2,5 1,8 RON/EUR 4,76 4,80 4,82 4,85
Serbia -3,5 -2,9 -5,3 -5,2 -5,0 -4,5 BGN/EUR 1,96 1,96 1,96 1,96
RSD/EUR 117,9 116,5 116,0 115,0
Fiscal Balance (% of GDP) Sovereign Eurobond Spread (bps)
Turkey -1,0 -1,1 -1,5 -1,9 -3,0 -3,0 Turkey (USD 2025)(**) 600 540 480 400
Romania -1,5 -2,4 -2,8 -2,9 -3,6 -3,8 Romania (EUR 2024) 138 128 120 110
Bulgaria -2,8 1,6 0,8 0,1 -0,5 -0,5 Bulgaria (EUR 2022) 56 45 43 40
Serbia -3,5 -1,2 1,1 0,6 -0,5 -0,4 Serbia (USD 2021)(**) 118 116 113 110
f: NBG forecasts (*) Base interest rate (**) Spread over US Treasuries
Financial Markets
Last week
return (%)13/5/2019
Year-to-Date
change (%)
2-year
change (%)
13/5/20193-month
forecast
6-month
forecast
12-month
forecast
South Eastern Europe Economic Forecasts
2017a Q1:18a Q2:18a Q3:18a Q4:18a 2018a Q1:19a Q2:19f Q3:19f Q4:19f 2019f
2,2 2,6 2,9 3,0 3,0 2,9 3,2 2,7 2,4 2,3 2,8
- 2,2 4,2 3,4 2,2 - 3,2 2,3 2,0 1,9 -
Private Consumption 2,5 0,5 3,8 3,5 2,5 2,6 1,2 3,0 2,1 2,0 2,4
Government Consumption -0,1 1,5 2,5 2,6 -0,4 1,5 2,4 2,5 1,8 1,4 1,8
Investment 4,8 8,0 6,4 1,1 3,1 5,2 1,5 5,8 3,9 3,5 3,3
Residential 3,3 -3,4 -1,4 -3,5 -4,7 -0,3 -2,8 0,4 1,3 1,1 -1,8
Non-residential 5,3 11,5 8,7 2,5 5,4 6,9 2,7 5,8 4,4 4,1 4,4
Inventories Contribution 0,0 0,3 -1,4 2,7 0,1 0,1 0,7 -0,9 -0,3 0,0 0,2
Net Exports Contribution -0,4 -0,1 1,3 -2,3 -0,1 -0,3 1,2 0,0 -0,2 -0,4 0,0
Exports 3,0 3,6 9,3 -4,9 1,8 4,0 3,7 3,4 2,6 2,1 2,3
Imports 4,6 3,0 -0,6 9,3 2,0 4,5 -3,7 2,6 2,9 3,5 1,6
Inflation (3) 2,1 2,2 2,7 2,6 2,2 2,4 1,7 1,7 1,7 2,1 1,8
2017a Q1:18a Q2:18a Q3:18a Q4:18a 2018a Q1:19a Q2:19f Q3:19f Q4:19f 2019f
2,5 2,4 2,1 1,6 1,1 1,8 1,2 1,2 1,5 1,7 1,4
- 1,4 1,7 0,6 0,9 - 1,5 1,7 1,7 1,7 -
Private Consumption 1,8 1,9 0,6 0,5 1,0 1,3 1,4 1,4 1,4 1,4 1,2
Government Consumption 1,2 0,1 1,7 0,2 2,9 1,0 1,2 1,2 1,2 1,3 1,4
Investment 2,9 0,0 6,3 2,5 2,4 3,1 2,7 2,4 2,4 2,4 3,2
Inventories Contribution -0,1 0,7 -0,2 1,3 -1,5 0,1 -0,2 0,0 0,0 0,0 -0,2
Net Exports Contribution 0,8 -0,4 -0,1 -1,6 0,8 0,2 0,2 0,2 0,2 0,1 0,0
Exports 5,5 -2,6 4,5 0,6 3,6 3,0 3,3 3,5 3,1 3,1 3,3
Imports 4,1 -2,1 5,1 4,3 2,2 2,9 3,2 3,4 3,1 3,1 3,7
Inflation 1,5 1,2 1,7 2,1 1,9 1,8 1,4 1,3 0,9 1,2 1,2a: Actual, f: Forecasts, 1. Seasonally adjusted YoY growth rate, 2. Seasonally adjusted annualized QoQ growth rate, 3. Year-to-year average % change
Real GDP Growth (QoQ saar) (2)
Euro AreaReal GDP Growth (YoY)
Real GDP Growth (QoQ saar)
United States
Real GDP Growth (YoY) (1)
Economic Forecasts
May 10th 3-month 6-month 12-month May 10th 3-month 6-month 12-month
Germany -0,05 0,20 0,30 0,40 Euro area 0,00 0,00 0,00 0,00
US 2,47 2,60 2,70 3,00 US 2,50 2,50 2,50 2,75
UK 1,14 1,49 1,59 1,72 UK 0,75 0,75 0,85 1,10
Japan -0,05 0,02 0,04 0,08 Japan -0,10 -0,10 -0,10 -0,10
Currency May 10th 3-month 6-month 12-month May 10th 3-month 6-month 12-month
EUR/USD 1,12 1,12 1,16 1,18 USD/JPY 110 109 107 105
EUR/GBP 0,86 0,85 0,85 0,86 GBP/USD 1,30 1,32 1,37 1,38
EUR/JPY 123 122 124 124
Official Rate (%)10-Yr Gov. Bond Yield (%)
Forecasts at end of period
Interest Rates & Foreign Exchange Forecasts
NBG Global Markets Roundup | Economic News & Events Calendar
National Bank of Greece | Economic Research Division | Global Markets Analysis
8
N A T I O N A L B A N Κ
O F G R E E C E
Tuesday 7 Wednesday 8 Thursday 9
GERMANY S A P US S A P
Trade balance ($bn) March -50.1 + -50.0 -49.3
Initial Jobless Claims (k) April 27 220 - 228 230
Continuing Claims (k) April 20 1670 - 1684 1671
CHINA
CHINA CPI (YoY) April 2.5% 2.5% 2.3%
Exports (YoY) April 3.0% - -2.7% 13.8% Aggregate Financing (RMB bn) April 1650.0 - 1360.0 2859.3
Imports (YoY) April -2.1% + 4.0% -7.9% New Yuan Loans (RMB bn) April 1200.0 - 1020.0 1690.0
Money Supply M0 (YoY) April 3.0% 3.5% 3.1%
Money Supply M1 (YoY) April 4.3% 2.9% 4.6%
Money Supply M2 (YoY) April 8.5% 8.5% 8.6%
Friday 10 Monday 13
US S A P JAPAN S A P
CPI (YoY) April 2.1% - 2.0% 1.9% Leading Index March 96.3 96.3 97.1
Core CPI (YoY) April 2.1% 2.1% 2.0% Coincident Index March 99.6 99.6 100.5
UK
GDP (QoQ) Q1:19 0.5% 0.5% 0.2%
GDP (YoY) Q1:19 1.8% 1.8% 1.4%
GDP (MoM) March 0.0% - -0.1% 0.2%
Private Consumption (QoQ) Q1:19 0.5% + 0.7% 0.3%
Government Spending QoQ Q1:19 0.4% + 1.4% 1.3%
Gross Fixed Capital Formation Q1:19 -0.3% + 2.1% -0.6%
Industrial Production (MoM) March 0.1% + 0.7% 0.6%
Industrial Production (YoY) March 0.5% + 1.3% 0.4%
Tuesday 14 Wednesday 15
UK S A P US S A P JAPAN S A P
ILO Unemployment Rate March 3.9% .. 3.9% Mortgage delinquencies Q1:19 .. .. 4.06% Construction Orders YoY March .. .. -3.4%
EURO AREA Mortgage foreclosures Q1:19 .. .. 0.95% GERMANY
Empire Manufacturing May 8.0 .. 10.1 GDP (QoQ) Q1:19 0.4% .. 0.0%
Retail Sales Advance MoM April 0.2% .. 1.6% GDP (wda, YoY) Q1:19 0.7% .. 0.6%
Retail sales ex-autos (MoM) April 0.7% .. 1.2% CHINA
Industrial Production (MoM) April 0.0% .. -0.1% Industrial production (YoY) April 6.5% .. 8.5%
JAPAN Retail sales (YoY) April 8.6% .. 8.7%
Eco Watchers Current Survey April 45.5 .. 44.8
Eco Watchers Outlook Survey April 48.0 .. 48.6
GERMANY
ZEW survey current situation May 6.3 .. 5.5 EURO AREA
ZEW survey expectations May 5.0 .. 3.1 Employment (QoQ) Q1:19 .. .. 0.3%
Employment (YoY) Q1:19 .. .. 1.3%
GDP (QoQ) Q1:19 0.4% .. 0.4%
GDP (YoY) Q1:19 1.2% .. 1.2%
Trade Balance SA (€ bn) March 19.4 .. 19.5
Thursday 16 Friday 17 Monday 20
US S A P US S A P JAPAN S A P
Housing starts (k) April 1207 .. 1139 GDP (QoQ) Q1:19 -0.1% .. 0.5%
Building permits (k) April 1290 .. 1269 GDP Private Consumption Q1:19 -0.2% .. 0.4%
GDP Business Spending (QoQ) Q1:19 -1.9% .. 2.7%
Initial Jobless Claims (k) May 11 220 .. 228
Continuing Claims (k) May 4 1680 .. 1684
Source: NBG Research, Bloomberg
S: Bloomberg Consensus Analysts Survey, A: Actual Outcome, P: Previous Outcome
Industrial Production (sa, MoM)
+
+
Net Long-term TIC Flows ($ bn) March .. .. 51.9
NAHB housing market
confidence indexMay 64 .. 63
Industrial Production (sa, MoM) March -0.5% 0.5% 0.4%
Industrial Production (wda, YoY)
Economic News Calendar for the period: May 7 - May 20, 2019
Industrial Production (wda, YoY)
March -0.3% ..
March
-0.2%
-0.3%March -0.8% ..
97.2..97.5MayUniversity of Michigan consumer
confidence
Philadelphia Fed Business
OutlookMay 9.0 .. 8.5
-2.6% -0.9% 0.2%
rat
The main macro events next week in the US include a plethora of high
frequency activity indicators, with respect to private consumption (retail
sales), business spending (industrial production) and the housing
market.
In the euro area, markets will focus on the 2nd preliminary estimate for
GDP in Q1:18. GDP growth is expected to remain unchanged compared
with the 1st estimate (final data is due at June 6th).
In Japan, the first estimate for Q1:18 GDP growth is released. GDP is
expected at -0.1% qoq in Q1:19, from 0.5% qoq in Q4:18.
Economic Calendar
0
10
20
30
40
50
60
70
80
90
400
500
600
700
800
900
1.000
1.100
1.200
1.300
1.400
Jan
-10
Jan
-11
Jan
-12
Jan
-13
Jan
-14
Jan
-15
Jan
-16
Jan
-17
Jan
-18
Jan
-19
Housing Starts (left)
NAHB housing market confidence index (right)'000
Source: NBG Research, Bloomberg
Forecasts
US Housing Starts & NAHB Housing market Confidence Index
NBG Global Markets Roundup | Financial Markets Monitor
National Bank of Greece | Economic Research Division | Global Markets Analysis
9
N A T I O N A L B A N Κ
O F G R E E C E
Developed MarketsCurrent
Level
1-week
change (%)
Year-to-Date
change (%)
1-Year
change (%)
2-year
change (%)Emerging Markets
Current
Level
1-week
change (%)
Year-to-Date
change (%)
1-Year
change (%)
2-year
change (%)
US S&P 500 2881 -2,2 14,9 5,8 20,1 MSCI Emerging Markets 57517 -4,3 7,7 -6,8 7,9
Japan NIKKEI 225 21345 -4,1 6,6 -5,1 7,3 MSCI Asia 854 -4,7 8,9 -8,7 8,1
UK FTSE 100 7203 -2,4 7,1 -6,5 -2,5 China 81 -6,0 14,4 -12,8 17,3
Canada S&P/TSX 16298 -1,2 13,8 2,1 4,2 Korea 632 -4,4 4,6 -14,9 -5,3
Hong Kong Hang Seng 28550 -5,1 10,5 -7,3 14,1 MSCI Latin America 90109 -2,1 4,3 -1,0 14,0
Euro area EuroStoxx 368 -3,6 12,0 -7,0 -6,0 Brazil 304434 -2,1 5,4 5,7 32,0
Germany DAX 30 12060 -2,8 14,2 -7,4 -5,5 Mexico 39980 -2,3 3,3 -9,4 -14,6
France CAC 40 5327 -4,0 12,6 -3,9 -1,4 MSCI Europe 5495 -3,7 3,5 0,4 9,3
Italy FTSE/MIB 20875 -4,1 13,9 -13,1 -3,1 Russia 1132 -2,9 6,5 7,6 26,3
Spain IBEX-35 9118 -3,1 6,8 -11,0 -17,4 Turkey 1189444 -6,3 -5,0 -14,4 -12,0
Equity Markets (in local currency)
in US Dollar termsCurrent
Level
1-week
change (%)
Year-to-Date
change (%)
1-Year
change (%)
2-year
change (%)in local currency
Current
Level
1-week
change (%)
Year-to-Date
change (%)
1-Year
change (%)
2-year
change (%)
Energy 201,0 -1,4 10,0 -15,0 -1,7 Energy 207,2 -1,3 9,6 -13,3 -2,1
Materials 245,7 -3,6 7,9 -11,2 4,0 Materials 236,8 -3,7 8,0 -8,7 3,2
Industrials 253,5 -3,0 15,3 -2,1 8,7 Industrials 251,9 -3,2 15,7 -0,6 7,5
Consumer Discretionary 255,7 -3,1 14,6 2,2 17,7 Consumer Discretionary 247,4 -3,4 14,8 3,2 16,3
Consumer Staples 233,1 -0,8 11,6 8,1 3,2 Consumer Staples 235,0 -1,0 11,9 9,9 2,8
Healthcare 238,8 -1,5 3,9 6,0 12,1 Healthcare 237,1 -1,6 4,1 7,0 11,6
Financials 115,3 -2,8 11,9 -8,7 2,9 Financials 116,3 -2,9 12,0 -6,8 2,3
IT 260,6 -3,5 22,4 7,3 37,6 IT 252,8 -3,6 22,5 7,7 37,1
Telecoms 71,1 -1,5 15,2 8,1 3,1 Telecoms 74,4 -1,6 15,3 10,3 2,0
Utilities 135,8 -0,7 7,8 8,6 9,8 Utilities 139,6 -0,8 8,0 10,4 9,1
World Market Sectors (MSCI Indices)
Current Last week Year StartOne Year
Back
10-year
average
Government Bond Yield
Spreads (in bps)Current Last week Year Start
One Year
Back
10-year
average
US 2,47 2,53 2,69 2,96 2,50 US Treasuries 10Y/2Y 20 19 20 43 159
Germany -0,05 0,03 0,24 0,56 1,36 US Treasuries 10Y/5Y 20 20 17 13 81
Japan -0,05 -0,04 0,00 0,05 0,57 Bunds 10Y/2Y 57 61 85 114 129
UK 1,14 1,22 1,28 1,43 2,17 Bunds 10Y/5Y 42 44 55 62 78
Greece 3,51 3,34 4,40 4,09 10,18
Ireland 0,54 0,55 0,90 0,98 3,77
Italy 2,68 2,56 2,74 1,93 3,35
Spain 0,98 0,98 1,42 1,31 3,20 EM Inv. Grade (IG) 164 161 213 162 225
Portugal 1,12 1,12 1,72 1,73 4,97 EM High yield 493 475 586 398 684
US IG 122 118 159 116 160
Current Last week Year StartOne Year
Back
10-year
averageUS High yield 401 372 533 341 532
30-Year FRM1 (%) 4,4 4,4 4,8 4,8 4,3 Euro area IG 118 109 154 95 147
vs 30Yr Treasury (bps) 152 149 183 167 108 Euro area High Yield 402 373 506 308 535
10-Year Government
Bond Yields
US Mortgage Market
(1. Fixed-rate Mortgage)
One Year
Back
10-year
average
Corporate Bond Spreads
(in bps)Current Last week Year Start
Bond Markets (%)
Current1-week
change (%)
1-month
change (%)
1-Year
change (%)
Year-to-Date
change (%)Commodities Current
1-week
change (%)
1-month
change (%)
1-Year
change (%)
Year-to-Date
change (%)
Euro-based cross rates
EUR/USD 1,12 0,3 -0,3 -5,7 -2,0 Agricultural 310 -4,3 -8,3 -22,3 -11,3
EUR/CHF 1,14 -0,3 0,5 -4,9 0,7 Energy 498 -0,5 -2,5 -7,3 29,9
EUR/GBP 0,86 1,6 0,3 -2,0 -3,9 West Texas Oil ($) 62 -0,5 -4,6 -13,6 35,8
EUR/JPY 123,56 -0,7 -1,3 -5,2 -1,7 Crude brent Oil ($) 72 0,5 0,5 -7,1 34,7
EUR/NOK 9,79 0,4 2,2 2,6 -1,2 Industrial Metals 1205 -1,5 -5,2 -15,5 1,5
EUR/SEK 10,80 1,0 3,4 4,7 6,4 Precious Metals 1517 0,4 -2,0 -4,2 -0,2
EUR/AUD 1,60 0,6 2,1 1,4 -1,3 Gold ($) 1286 0,5 -1,7 -2,7 0,3
EUR/CAD 1,51 0,3 0,4 -0,9 -3,6 Silver ($) 15 -1,1 -3,0 -11,6 -4,6
USD-based cross rates Baltic Dry Index 1013 2,8 38,0 -30,3 -20,3
USD/CAD 1,34 -0,1 0,7 5,1 -1,7 Baltic Dirty Tanker Index 697 8,1 12,4 6,3 -44,3
USD/AUD 1,43 0,3 2,5 7,6 0,7
USD/JPY 109,95 -1,0 -1,0 0,5 0,2
Foreign Exchange
Foreign Exchange & Commodities
Source: Bloomberg, as of May 10th, S&P/Goldman Sachs Indices for Agricultural, Energy, Industrial &
Precious Metals, BofA/ML Indices for Corporate Bond Spreads
NBG Global Markets Roundup | Chartroom
National Bank of Greece | Economic Research Division | Global Markets Analysis
10
N A T I O N A L B A N Κ
O F G R E E C E
Source: Bloomberg, NBG estimates, Cumulative flows since January 2014, AUM stands for Assets
Under Management, Data as of May 10th
Source: Bloomberg, NBG estimates, Cumulative flows since January 2014, AUM stands for
Assets Under Management, Data as of May 10th
Global Cross Asset ETFs: Flows as % of AUM Equity ETFs: Flows as % of AUM
Source: Bloomberg - Data as of May 10th – Rebased @ 100
Source: Bloomberg, Data as of May 10th
Source: Bloomberg - Data as of May 10th – Rebased @ 100
Source: Bloomberg, Data as of May 10th
86
88
90
92
94
96
98
100
102
104
106
108
110
86
88
90
92
94
96
98
100
102
104
106
108
110
8-N
ov
22-N
ov
6-D
ec
20-D
ec
3-Ja
n
17-J
an
31-J
an
14-F
eb
28-F
eb
14-M
ar
28-M
ar
11-A
pr
25-A
pr
9-M
ay
S&P500 EuroStoxx FTSE 100 Nikkei 225
-6
-5
-4
-3
-2
-1
0
1
2
1240
1280
1320
1360
1400
1440
1480
1520
1560
1600
1640
1680
8-N
ov
22
-No
v
6-D
ec
20
-Dec
3-J
an
17
-Jan
31-J
an
14
-Feb
28
-Feb
14
-Mar
28
-Mar
11
-Ap
r
25
-Ap
r
9-M
ay
Small Cap/Large Cap Relative Performance during the previous 6 months (right)Russell 2000-Small cap (left)Russell 1000-Large Cap (left)
Equity Market Performance - G4 Equity Market Performance - BRICs
Russell 2000 Value & Growth Index
Russell 2000 & Russell 1000 Index
-15-10-505101520253035404550556065
-15-10
-505
101520253035404550556065
Jan
-14
May
-14
Sep
-14
Jan
-15
May
-15
Sep
-15
Jan
-16
May
-16
Sep
-16
Jan
-17
May
-17
Sep
-17
Jan
-18
May
-18
Sep
-18
Jan
-19
May
-19
DM Equities Bonds
EM Equities Commodities% %
92
96
100
104
108
112
116
120
124
128
132
92
96
100
104
108
112
116
120
124
128
132
8-N
ov
22-N
ov
6-D
ec
20-D
ec
3-Ja
n
17-J
an
31-J
an
14-F
eb
28-F
eb
14-M
ar
28-M
ar
11-A
pr
25-A
pr
9-M
ay
Brazil China Russia India
-6
-4
-2
0
2
4
6
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
8-N
ov
22-N
ov
6-D
ec
20
-Dec
3-J
an
17
-Jan
31
-Jan
14
-Feb
28
-Feb
14-M
ar
28
-Mar
11
-Ap
r
25
-Ap
r
9-M
ay
Value/Growth Relative Performance during the previous 6 months (right)Russell 2000 Value (left)Russell 2000 Growth (left)
-15
-10
-5
0
5
10
15
20
25
30
35
-15
-10
-5
0
5
10
15
20
25
30
35
Jan
-14
May
-14
Sep
-14
Jan
-15
May
-15
Sep
-15
Jan
-16
May
-16
Sep
-16
Jan
-17
May
-17
Sep
-17
Jan
-18
May
-18
Sep
-18
Jan
-19
May
-19
US Emerging Markets Europe exUK% %
NBG Global Markets Roundup | Chartroom
National Bank of Greece | Economic Research Division | Global Markets Analysis
11
N A T I O N A L B A N Κ
O F G R E E C E
Source: Bloomberg, Data as of May 10th Source: Bloomberg, Data as of May 10th
1,11
1,12
1,13
1,14
1,15
1,16
1,11
1,12
1,13
1,14
1,15
1,16
8-N
ov
22
-No
v
6-D
ec
20
-De
c
3-J
an
17
-Jan
31
-Jan
14
-Fe
b
28
-Fe
b
14
-Mar
28
-Mar
11
-Ap
r
25
-Ap
r
9-M
ay
EUR-USD €/$€/$
Stronger USD
EUR/USD
JPY/USD
Source: Bloomberg - Data as of May 10th
LA:Left Axis RA:Right Axis
Source: Bloomberg, Data as of May 10th
Source: Bloomberg - Data as of May 10th
Source: Bloomberg, Data as of May 10th
-0,2
-0,1
0,0
0,1
0,2
0,3
0,4
0,5
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
2,2
2,4
2,6
2,8
3,0
3,2
3,4
8-N
ov
22-N
ov
6-D
ec
20-D
ec
3-Ja
n
17-J
an
31-J
an
14-F
eb
28-F
eb
14-M
ar
28-M
ar
11-A
pr
25-A
pr
9-M
ay
US (LA) UK (LA) Japan (RA) Germany (RA) %%
1.170
1.190
1.210
1.230
1.250
1.270
1.290
1.310
1.330
1.350
1.170
1.190
1.210
1.230
1.250
1.270
1.290
1.310
1.330
1.350
8-N
ov
22-N
ov
6-D
ec
20-D
ec
3-Ja
n
17-J
an
31-J
an
14-F
eb
28-F
eb
14-M
ar
28-M
ar
11-A
pr
25-A
pr
9-M
ay
Gold $/ounch$/ounch
10- Year Government Bond Yields 10- Year Government Bond Spreads
West Texas Intermediate ($/brl)
Gold ($/ounch)
107
108
109
110
111
112
113
114
115
107
108
109
110
111
112
113
114
115
8-N
ov
22-N
ov
6-D
ec
20-D
ec
3-Ja
n
17-J
an
31-J
an
14-F
eb
28-F
eb
14-M
ar
28-M
ar
11-A
pr
25-A
pr
9-M
ay
USD-JPY $/¥$/¥
Stronger JPY
50
100
150
200
250
300
350
50
100
150
200
250
300
350
8-N
ov
22-N
ov
6-D
ec
20-D
ec
3-Ja
n
17-J
an
31-J
an
14-F
eb
28-F
eb
14-M
ar
28-M
ar
11-A
pr
25-A
pr
9-M
ay
Italy Portugal Spain bpsbps
40
42
44
46
48
50
52
54
56
58
60
62
64
66
68
40
42
44
46
48
50
52
54
56
58
60
62
64
66
68
8-N
ov
22-N
ov
6-D
ec
20-D
ec
3-Ja
n
17-J
an
31-J
an
14-F
eb
28-F
eb
14-M
ar
28-M
ar
11-A
pr
25-A
pr
9-M
ay
WTI $/brl$/brl
NBG Global Markets Roundup | Equity Market Valuation Metrics
National Bank of Greece | Economic Research Division | Global Markets Analysis
12
N A T I O N A L B A N Κ
O F G R E E C E
US Sectors Valuation
-5
-4
-3
-2
-1
0
1
2
3
4
5
Ener
gy
Fin
anci
als
Hea
lth
Car
e
Co
ns
Dis
cret
ion
ary
Re
al E
stat
e
S&P
50
0
Uti
litie
s IT
Co
nsu
me
r St
aple
s
Ind
ust
rial
s
Co
mm
Ser
vice
s
Mat
eri
als
2019
12-month forward
%
1-month revisions to 2019 & 12-month Forward EPSEarnings Revisions indicate 1-month change in 2019 & 12-month Forward EPS
-20
-15
-10
-5
0
5
10
15
Co
mm
Ser
vice
s
Hea
lth
Car
e
Co
ns
Dis
cret
ion
ary
Fin
anci
als
Uti
litie
s
Re
al E
stat
e
S&P
50
0
Ind
ust
rial
s IT
Co
nsu
me
r St
aple
s
Ener
gy
Mat
eri
als
2019
12-month forward
%
12-month revisions to 2019 & 12-month Forward EPSEarnings Revisions indicate 12-month change in 2019 & 12-month Forward EPS
P/BV Ratio
10/5/2019 % Weekly Change 2018 2019 2018 2019 2018 2019 12m fwd 10Yr Avg 2018 2019 12m fwd 10Yr Avg
S&P500 2881 -2,2 18,2 7,5 2,0 2,0 17,4 17,2 16,6 14,8 3,2 3,2 3,1 2,4
Energy 472 -0,6 73,7 9,7 3,2 3,6 20,1 17,6 16,3 20,4 1,8 1,6 1,6 1,8
Materials 345 -2,8 23,5 -6,7 1,9 2,4 16,7 16,5 15,9 14,7 2,6 2,0 2,0 2,5
Financials
Diversified Financials 675 -2,5 27,9 7,0 1,3 1,6 16,0 14,3 13,9 13,9 1,9 1,7 1,6 1,4
Banks 323 -3,2 24,7 11,4 2,2 3,0 13,0 10,5 10,2 12,1 1,4 1,2 1,2 1,0
Insurance 417 0,6 33,6 6,2 2,2 2,1 12,2 12,2 11,9 10,5 1,4 1,4 1,4 1,1
Real Estate 223 -0,7 5,8 3,2 3,8 3,3 16,7 19,4 19,0 18,0 3,1 3,6 3,7 2,8
Industrials
Capital Goods 671 -3,0 15,9 6,7 2,0 2,1 19,0 17,1 16,3 15,3 4,6 4,6 4,5 3,2
Transportation 771 -3,0 25,0 12,7 1,8 1,9 14,0 13,7 13,2 14,0 3,6 4,0 3,9 3,3
Commercial Services 305 -1,0 16,7 7,4 1,5 1,5 22,8 24,8 23,9 19,2 4,1 4,9 4,8 3,2
Consumer Discretionary
Retailing 2328 -3,0 22,2 26,8 0,8 0,8 30,8 28,5 27,1 20,0 10,1 11,4 10,7 5,4
Media 598 -2,2 18,7 13,7 0,4 0,4 23,6 23,3 22,1 19,2 4,1 3,7 3,5 3,1
Consumer Services 1224 -0,8 17,2 10,9 1,9 2,0 20,6 21,7 20,9 18,7 8,9 13,9 13,9 5,7
Consumer Durables 330 -2,5 17,2 -0,5 1,6 1,6 17,1 17,6 17,0 16,9 3,2 3,5 3,4 3,1
Automobiles and parts 119 -2,3 -5,2 -3,0 3,7 4,0 7,8 7,3 7,2 8,8 1,6 1,4 1,3 1,7
IT
Technology 1223 -5,8 16,9 1,7 1,8 1,8 15,1 16,1 15,5 12,5 5,2 7,0 6,9 3,3
Software & Services 1990 -1,4 14,0 11,0 1,3 1,1 22,7 24,4 23,4 16,4 6,9 8,5 8,0 4,9
Semiconductors 1006 -6,7 16,1 -1,7 1,9 2,2 14,8 15,0 14,5 14,8 4,3 4,4 4,3 2,9
Consumer Staples
Food & Staples Retailing 427 0,6 12,0 0,8 2,1 2,0 17,4 19,3 19,0 15,6 3,6 3,8 3,8 3,0
Food Beverage & Tobacco 672 -0,6 12,5 -1,4 3,3 3,5 18,3 18,4 17,9 17,1 5,1 4,7 4,6 4,8
Household Goods 659 -0,6 9,9 2,4 3,1 2,6 19,3 23,3 22,8 18,5 5,4 6,8 6,7 4,6
Health Care
Pharmaceuticals 871 -2,4 8,3 10,0 2,2 2,3 15,2 14,3 13,9 14,2 4,2 4,8 4,6 3,4
Healthcare Equipment 1159 -0,4 13,1 14,3 1,1 1,2 18,0 17,1 16,5 14,7 3,3 3,0 2,9 2,5
Communication Services 151 -0,6 15,2 4,8 5,6 5,5 10,6 10,0 9,9 12,7 2,0 1,8 1,7 2,3
Utilities 294 -0,7 5,2 3,6 3,9 3,4 16,4 18,7 18,3 15,0 1,7 2,0 2,0 1,6
Source Factset, Blue box indicates a value more than +2standard devation from average, light blue a value more than +1standard devation from average. Orange box indicates a value less than -2standard devation from
average, light orange a value less than -1standard devation from average
EPS Growth (%) P/E RatioPrice ($) Dividend Yield (%)
Source: Factset, Data as of May 10th
12-month forward EPS are 64% of 2019 EPS and 36% of 2020 EPS
Source: Factset, Data as of May 10th
12-month forward EPS are 64% of 2019 EPS and 36% of 2020 EPS
NBG Global Markets Roundup | Equity Market Valuation Metrics
National Bank of Greece | Economic Research Division | Global Markets Analysis
13
N A T I O N A L B A N Κ
O F G R E E C E
Euro Area Sectors Valuation
-8
-6
-4
-2
0
2
4
6
8
10
12
Fin
/al S
ervi
ces
Foo
d&
Bev
erag
e
Ho
use
ho
ld G
oo
ds
Med
ia
Ind
ust
rial
Insu
ran
ce
Mat
eria
ls
Ene
rgy
Rea
l Est
ate
Trav
el a
nd
Lei
sure
He
alth
car
e
Euro
Sto
xx
Co
mm
Ser
vice
s
Ret
ail
Uti
litie
s
Ch
emic
als
Ban
ks
Tech
no
logy
Au
tos
and
par
ts
Bas
ic R
eso
urc
es
2019
12-month Forward
%
1-month revisions to 2019 & 12-month Forward EPSEarnings Revisions indicate 1-month change in 2019 & 12-month Forward EPS
-20
-15
-10
-5
0
5
10
15
20
25
Ene
rgy
Ho
use
ho
ld G
oo
ds
Insu
ran
ce
Rea
l Est
ate
Ret
ail
Med
ia
Uti
litie
s
Mat
eria
ls
Foo
d&
Bev
erag
e
Fin
/al S
ervi
ces
Ind
ust
rial
Co
mm
Ser
vice
s
Euro
Sto
xx
He
alth
car
e
Tech
no
logy
Bas
ic R
eso
urc
es
Trav
el a
nd
Lei
sure
Ban
ks
Ch
emic
als
Au
tos
and
par
ts2019
12-month Forward
%
12-month revisions to 2019 & 12-month Forward EPSEarnings Revisions indicate 12-month change in 2019 & 12-month Forward EPS
10/5/2019 % Weekly Change 2018 2019 2018 2019 2018 2019 12m fwd 10Yr Avg 2018 2019 12m fwd 10Yr Avg
EuroStoxx 368 -3,6 7,2 0,2 3,2 3,5 14,8 14,2 13,7 13,1 1,6 1,6 1,5 1,4
Energy 319 -4,3 7,3 26,4 4,8 5,1 13,6 11,0 10,6 11,4 1,2 1,2 1,1 1,2
Materials 427 -4,6 9,7 8,0 3,1 3,6 15,3 13,8 13,3 14,1 1,7 1,6 1,6 1,4
Basic Resources 185 -7,5 -3,3 0,5 2,3 3,8 12,9 8,8 8,5 15,8 1,2 0,7 0,7 0,9
Chemicals 1023 -4,7 5,1 -14,7 2,8 3,0 16,0 17,5 16,8 14,9 2,4 1,9 1,9 2,2
Financials
Fin/al Services 441 -2,9 14,4 1,5 2,6 2,8 15,9 15,0 14,6 13,8 1,7 1,4 1,3 1,2
Banks 94 -6,3 12,4 -6,5 4,1 6,0 11,5 8,5 8,3 10,4 0,9 0,6 0,6 0,7
Insurance 275 -4,7 14,2 7,0 5,0 5,5 10,8 10,0 9,8 9,2 1,0 1,0 1,0 0,9
Real Estate 242 1,6 8,4 7,4 4,2 4,5 18,7 18,1 17,7 16,8 1,0 1,0 1,0 1,0
Industrial 845 -2,2 12,2 6,3 2,6 2,7 18,1 17,4 16,7 14,9 2,8 2,8 2,7 2,2
Consumer Discretionary
Media 229 -1,7 0,5 8,7 3,8 3,7 17,7 16,6 16,1 15,2 2,3 2,2 2,2 2,0
Retail 522 -3,3 11,4 9,4 2,7 3,1 20,3 20,3 19,6 18,1 2,8 3,2 3,1 2,7
Automobiles and parts 476 -6,8 4,6 -13,0 3,3 4,3 8,2 7,5 7,3 9,3 1,2 0,9 0,9 1,0
Travel and Leisure 177 -6,9 2,1 -13,3 1,7 2,4 12,0 10,6 10,2 35,0 2,0 1,6 1,5 1,8
Technology 514 -4,0 3,4 1,5 1,6 1,6 21,4 21,9 20,6 18,0 3,6 3,5 3,4 2,9
Consumer Staples
Food&Beverage 594 -3,0 15,4 6,6 2,9 2,1 20,6 19,7 19,2 18,0 2,9 2,7 2,6 2,6
Household Goods 971 -2,8 7,5 14,0 1,9 1,9 23,1 25,2 24,4 19,9 4,3 5,3 5,1 3,5
Health care 733 -3,6 4,9 -3,6 2,5 2,6 17,0 16,4 15,9 14,6 2,1 2,0 1,9 2,1
Communication Services 289 -0,5 -3,8 -1,1 4,8 5,1 14,0 14,0 13,6 13,3 1,7 1,7 1,7 1,7
Utilities 309 -0,3 -4,5 6,4 5,2 4,8 14,1 15,5 14,8 12,3 1,2 1,5 1,5 1,1
P/E RatioPrice (€) P/BV RatioDividend Yield (%)EPS Growth (%)
Source Factset, Blue box indicates a value more than +2standard devation from average, light blue a value more than +1standard devation from average. Orange box indicates a value less than -2standard devation from
average, light orange a value less than -1standard devation from average
Source: Factset, Data as of May 10th
12-month forward EPS are 64% of 2019 EPS and 36% of 2020 EPS
Source: Factset, Data as of May 10th
12-month forward EPS are 64% of 2019 EPS and 36% of 2020 EPS
NBG Global Markets Roundup | Disclosures & Analyst Certification
National Bank of Greece | Economic Research Division | Global Markets Analysis
14
N A T I O N A L B A N Κ
O F G R E E C E
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ANALYST CERTIFICATION:
The research analyst denoted by an “AC” on page 1 holds the certificate (type Δ) of the Hellenic Capital Market Commission/Bank
of Greece which allows her/him to conduct market analysis and reporting and hereby certifies that all of the views expressed in
this report accurately reflect his or her personal views solely, about any and all of the subject issues. Further, each of these
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