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

See page 14 for disclosures and analyst certification

1

0

100

200

300

400

500

600

0

20

40

60

80

100

120

140

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

[email protected]

Panagiotis Bakalis

210-3341545

[email protected]

Lazaros Ioannidis

210-3341207

[email protected]

Vasiliki Karagianni

210-3341548

[email protected]

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.

mailto:[email protected]


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.


O F G R E E C E

NBG Global Markets Roundup | Economics & Markets Section


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

94

96

98

100

102

104

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)


£/$€/£

GBP depreciates

British Pound

NBG Global Markets Roundup | Asset Allocation


4


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


5


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



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



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


6


O F G R E E C E

Turkey Romania Bulgaria Serbia

Emerging Markets Research, Head: Dr. Michael Loufir, tel:210-3341211, email: [email protected]

Fo

reig

n D

eb

t

Attractive valuations

▬ Weak foreign investor

appetite for emerging

market assets

▬ Persisting domestic

financial crisis

Strong economic activity




market assets


Low-yielding domestic

debt and deposits



market assets




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


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



market assets


financial crisis

▬ Large external financing

requirements

▬ Heightened domestic

political uncertainty

Solidly-based currency

board arrangement, with

substantial buffers



requirements

Ongoing EU membership

negotiations

Policy Coordination


▬ Sizable external financing

requirements

▬ Reinvigorated progress in

structural reforms

Currency board

arrangement

Large foreign currency

reserves and fiscal

reserves



requirements



High domestic debt yields


requirements



market assets

▬ Persisting geopolitical risks

and domestic financial crisis

▬ Escalating global trade war


requirements



Ongoing EU membership

negotiations

Policy Coordination


Large FDIs


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


7


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


8


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%



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


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


Forecasts

US Housing Starts & NAHB Housing market Confidence Index

NBG Global Markets Roundup | Financial Markets Monitor


9


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


10


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


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


11


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


-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


12


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

%


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



NBG Global Markets Roundup | Equity Market Valuation Metrics


13


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

%


-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

%


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





NBG Global Markets Roundup | Disclosures & Analyst Certification


14


O F G R E E C E

DISCLOSURES:

This report has been produced by the Economic Research Division of the National Bank of Greece, which is regulated by the Bank

of Greece, and is provided solely as a sheer reference for the information of experienced and sophisticated investors who are

expected and considered to be fully able to make their own investment decisions without reliance on its contents, i.e. only after

effecting their own independent enquiry from sources of the investors’ sole choice. The information contained in this report does

not constitute the provision of investment advice and under no circumstances is it to be used or considered as an offer or an

invitation to buy or sell or a solicitation of an offer or invitation to buy or sell or enter into any agreement with respect to any

security, product, service or investment. No information or opinion contained in this report shall constitute any representation or

warranty as to future performance of any financial instrument, credit, currency rate or other market or economic measure. Past

performance is not necessarily a reliable guide to future performance. National Bank of Greece and/or its affiliates shall not be

liable in any matter whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss

of profits and damages) of any reliance on or usage of this report and accepts no legal responsibility to any investor who directly

or indirectly receives this report. The final investment decision must be made by the investor and the responsibility for the

investment must be taken by the investor.

Any data provided in this report has been obtained from sources believed to be reliable but has not been independently verified.

Because of the possibility of error on the part of such sources, National Bank of Greece does not guarantee the accuracy,

timeliness or usefulness of any information. Information and opinions contained in this report are subject to change without

notice and there is no obligation to update the information and opinions contained in this report. The National Bank of Greece

and its affiliate companies, its representatives, its managers and/or its personnel or other persons related to it, accept no

responsibility, or liability as to the accuracy, or completeness of the information contained in this report, or for any loss in general

arising from any use of this report including investment decisions based on this report. This report does not constitute investment

research or a research recommendation and as such it has not been prepared in accordance with legal requirements designed to

promote investment research independence. This report does not purport to contain all the information that a prospective

investor may require. Recipients of this report should independently evaluate particular information and opinions and seek the

advice of their own professional and financial advisers in relation to any investment, financial, legal, business, tax, accounting or

regulatory issues before making any investment or entering into any transaction in relation to information and opinions discussed

herein.

National Bank of Greece has prepared and published this report wholly independently of any of its affiliates and thus any

commitments, views, outlook, ratings or target prices expressed in these reports may differ substantially from any similar reports

issued by affiliates which may be based upon different sources and methodologies.

This report is not directed to, or intended for distribution to use or use by, any person or entity that is a citizen or resident of or

located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary

to any law, regulation or rule.

This report is protected under intellectual property laws and may not be altered, reproduced or redistributed, or passed on directly

or indirectly, to any other party, in whole or in part, without the prior written consent of National Bank of Greece.

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

individuals also certifies that no part of any of the report analyst’s compensation was, is, or will be directly or indirectly related to

the specific recommendations or views expressed in this report. Also, all opinions and estimates are subject to change without

notice and there is no obligation for update.

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

Documents