Founder

Olivier Desbarres

Exacting. Excellent. Exceeding. Exemplary.

4X Global Research

4X Global Research was founded in 2017 to provide institutional and corporate clients with the substantive research, high-quality analysis and thoughtful insight on Emerging and G20 economies and financial markets they need to make informed and timely decisions and gain an edge in their investments.

FX & Rates

Media coverage of Emerging Market currencies tends to oscillate between the very bearish and very bullish, with little differentiation between low and high-yielding currencies or between regional blocks let alone between the dozens of currencies still referred to, rightly or wrongly, as “emerging”. Price action in 2019 only partially vindicates this approach.News articles about the November EM currency rally and the long list of factors supporting further outperformance next year have been rife.EM currencies, particularly high-yielders, materially outperformed in the fortnight following the US elections thanks in part to a pick-up in portfolio inflows. The prevailing view was/is that a less conflictual Biden presidency will be a net positive for global trade and commodity prices. EM currencies appreciated further following news on 23rd November that the more affordable Astra Zeneca vaccine was up to 90% effective and Trump’s announcement that he would allow the transition of power to President-elect Biden.However, in the past two weeks a GDP-weighted basket of EM currencies (excluding the Chinese Renminbi) has appreciated only 0.9% versus the Dollar and underperformed a basket of developed market currencies (+1.3%). Moreover, high yielding EM currencies (+1.1%) have only marginally outperformed low-yielding EM currencies (+0.7%). Domestic and regional factors over-and-above “global risk appetite” have arguably contributed to the outperformance of Central European and Latam currencies and the more mixed (read subdued) performance of high-yielding EM and Asian currencies. One explanation is that some of these EM currencies are already pricing in a lot of “good” news.The consensus forecast is seemingly that EM currencies will outperform both the Dollar and developed market currencies going forward. The long list of supporting factors includes i) cheap EM valuations, ii) EM currencies’ yield advantage, iii) the benefits to EM of further Dollar depreciation and iv) a rebound in global economic growth. We sympathise with this view, albeit with some important caveats. One is that more interventionist Asian central banks may stop their currencies from fully joining any EM currency party in 2021. Moreover, we would split the next 13 months into three timelines.

Media coverage of Emerging Market currencies tends to oscillate between the very bearish and very bullish, with little differentiation between low and high-yielding currencies or between regional blocks let alone between the dozens of currencies still referred to, rightly or wrongly, as “emerging”. Price action in 2019 only partially vindicates this approach.News articles about the November EM currency rally and the long list of factors supporting further outperformance next year have been rife.EM currencies, particularly high-yielders, materially outperformed in the fortnight following the US elections thanks in part to a pick-up in portfolio inflows. The prevailing view was/is that a less conflictual Biden presidency will be a net positive for global trade and commodity prices. EM currencies appreciated further following news on 23rd November that the more affordable Astra Zeneca vaccine was up to 90% effective and Trump’s announcement that he would allow the transition of power to President-elect Biden.However, in the past two weeks a GDP-weighted basket of EM currencies (excluding the Chinese Renminbi) has appreciated only 0.9% versus the Dollar and underperformed a basket of developed market currencies (+1.3%). Moreover, high yielding EM currencies (+1.1%) have only marginally outperformed low-yielding EM currencies (+0.7%). Domestic and regional factors over-and-above “global risk appetite” have arguably contributed to the outperformance of Central European and Latam currencies and the more mixed (read subdued) performance of high-yielding EM and Asian currencies. One explanation is that some of these EM currencies are already pricing in a lot of “good” news.The consensus forecast is seemingly that EM currencies will outperform both the Dollar and developed market currencies going forward. The long list of supporting factors includes i) cheap EM valuations, ii) EM currencies’ yield advantage, iii) the benefits to EM of further Dollar depreciation and iv) a rebound in global economic growth. We sympathise with this view, albeit with some important caveats. One is that more interventionist Asian central banks may stop their currencies from fully joining any EM currency party in 2021. Moreover, we would split the next 13 months into three timelines.

Emerging Market Currencies: Hopes and Realities

Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Equity Bottom-Up

<ul><li>VGI reported better-than-expected earnings results in 2QFY20/21 on the back of the resumption of ad spending.</li><li>We believe net profit will continue to improve in the rest of this year.</li><li>We thus maintain our Hold rating, with the SOTP-based TP of Bt7.80.</li></ul>

VGI reported better-than-expected earnings results in 2QFY20/21 on the back of the resumption of ad spending.We believe net profit will continue to improve in the rest of this year.We thus maintain our Hold rating, with the SOTP-based TP of Bt7.80.

Earnings Surpassed Breakeven Level in 2QFY20/21

<ul><li>VGI reported weak earnings results in 1QFY20/21 as expected, but improvement is likely in the remainder of the year thanks to the easing of the COVID-19 situation.</li><li>VGI delivered a net loss of Bt104mn in 1QFY20/21 (April-June 2020), weakening from a net profit of Bt304mn in 1QFY19/20 and Bt369mn in 4QFY19/20 given the adverse impact of COVID-19 and the countrywide lockdown on ad spending.</li><li>We stand by our net profit projection of Bt885mn in FY20/21E for VGI, as we believe earnings will improve starting from 2QFY20/21E onward thanks to the easing of the lockdowns.</li></ul>

VGI reported weak earnings results in 1QFY20/21 as expected, but improvement is likely in the remainder of the year thanks to the easing of the COVID-19 situation.VGI delivered a net loss of Bt104mn in 1QFY20/21 (April-June 2020), weakening from a net profit of Bt304mn in 1QFY19/20 and Bt369mn in 4QFY19/20 given the adverse impact of COVID-19 and the countrywide lockdown on ad spending.We stand by our net profit projection of Bt885mn in FY20/21E for VGI, as we believe earnings will improve starting from 2QFY20/21E onward thanks to the easing of the lockdowns.

Major currencies, equity markets and the price of crude oil since 8th June – the cycle low in the US Dollar – have exhibited reasonably limited directionality, narrow trading ranges and very low volatility, with the notable exception of currencies in Central and Latin America.However this is not a case of more confident financial market participants finding their feet, in our view. Rather it is a reflexion of greater global risk aversion, with financial markets unable to see through the smoke and reluctant to pit themselves against their peers and test monetary authorities’ resolve at a time of still acute uncertainty on many levels.

Major currencies, equity markets and the price of crude oil since 8th June – the cycle low in the US Dollar – have exhibited reasonably limited directionality, narrow trading ranges and very low volatility, with the notable exception of currencies in Central and Latin America.However this is not a case of more confident financial market participants finding their feet, in our view. Rather it is a reflexion of greater global risk aversion, with financial markets unable to see through the smoke and reluctant to pit themselves against their peers and test monetary authorities’ resolve at a time of still acute uncertainty on many levels.

Risk Aversion, Not Panic, in Face of Uncertainty

<ul><li>We have a neutral view on the analyst meeting with BTS, as it was mostly in line with our expectations.</li><li>We maintain our Buy call with the SOTP-based TP of Bt13.00, not yet including the incremental value from U-Tapao Airport and the Orange Line.</li><li>BTS delivered a net profit of Bt8.2bn in FY19/20, including net extra items of Bt4.4bn.</li></ul>

We have a neutral view on the analyst meeting with BTS, as it was mostly in line with our expectations.We maintain our Buy call with the SOTP-based TP of Bt13.00, not yet including the incremental value from U-Tapao Airport and the Orange Line.BTS delivered a net profit of Bt8.2bn in FY19/20, including net extra items of Bt4.4bn.

Chile

The Chilean peso is the official currency of the Republic of Chile.  The US dollar is the official currency of the United States of America.

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Emerging Market Currencies: Hopes and Realities

EM currencies appreciated vs USD and outperformed in fortnight following US elections but since then performance more differentiated. Consensus is...

Olivier Desbarres

Earnings Surpassed Breakeven Level in 2QFY20/21

VGI reported better-than-expected earnings results in 2QFY20/21 on the back of the resumption of ad spending. We believe net profit will continue...

Krungthai XSpring

Earnings Contained No Surprises

VGI reported weak earnings results in 1QFY20/21 as expected, but improvement is likely in the remainder of the year thanks to the easing of the...

Krungthai XSpring

Risk Aversion, Not Panic, in Face of Uncertainty

Major currencies, equity markets and the price of crude oil since 8th June – the cycle low in the US Dollar – have exhibited reasonably limited...

Olivier Desbarres

Riding With New Opportunity

We have a neutral view on the analyst meeting with BTS, as it was mostly in line with our expectations. We maintain our Buy call with the...

Krungthai XSpring

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