ASIA_CREDIT_STRATEGY:WILL_THIS_TIME_BE_DIFFERENT_-2013-04-14.pdf
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1、Deutsche Bank Markets Research Asia-Pacific (EM) Asia Credit Strategy Credit HY Strategy IG Strategy Date 12 April 2013 Will this time be different? _ Deutsche Bank AG/Hong Kong DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 072/04/2012. Gene Cheon Research Analyst (+65) 6
2、4236967 Colin Tan, CFA Research Analyst (+852) 2203 5720 Devinda Paranathanthri Research Analyst (+65) 64235718 Time to take stock and fine-tune our expectations for 2013 After having twice reached our respective IG and HY target of 220bp and 550bp in Q1, we take stock and fine tune our expectati
3、ons for the rest of the year. Our directional view remains unchanged. We still expect spreads to finish the year tighter but have revised our total return forecast. We now expect IG and HY spreads to reach around 222bp (current 233bp) and 504bp (current 510bp) in Q4. Together with DBs house view on
4、rates, this gives us a TR of +3.6% for IG and +7.4% for HY in 2013. Can the BoJ offset the seasonal weakness in May-June? The BoJs QE is clearly the topic du jour and global risk assets have responded favorably. BoJs policies have potentially significant implications for global fixed income markets
5、if Japanese investors are forced to look abroad for higher yielding alternatives. Structurally this could become a technical tailwind for Asian Credit, but we think it may take some time before inflows become firmly entrenched. The impact will likely vary across sectors/regions and high quality spre
6、ad products (stronger Sovs/Quasis) are likely to be the first beneficiary. Fighting central bank liquidity has proven to be costly, so we remain strategically invested in Asian credit given the carry/spread relative to DM assets. However, as we approach the seasonally weaker months (May- June) for c
7、redit spreads we feel the need to be tactically cautious and selective in Q2. Few other reasons for this include the a) softening data momentum low visibility of a strong earnings improvement in 1H, b) large new issues pipeline ahead, c) lingering geopolitical risks in Asia and d) Eurozone growth/po
8、litical uncertainties. We also update our performance review charts on Asia credit. Strategy recommendation Investment Grade Prefer quality names with better trading liquidity. With positioning in short-dated paper becoming somewhat one-sided, the belly now offers some selective value. We consider f
9、our investment themes. ? Clean energy play: upgrade XINAOG 21 to CreditBuy and maintain CreditBuy on LONGYU 49. ? China over Korea for value- switch ideas: Buy CNOOC 22/Sell KORGAS 20, Buy COSL 22 /Sell POHANG 21, Buy TENCNT 18 /Sell SKM 18. ? India Quasi Corps: After the strong rally we think the o
10、verall sector looks fairly valued here. ? High beta play: CreditBuy YZCOAL 22 as valuations are not stretched given the absence of an imminent rating downgrade risk. High Yield Overall valuations for high yield offers little upside at this point and we view the sector as more of a carry play. We rem
11、ain selective, focusing on spread pick up plays with less downside risks. ? China Industrials: We rate FUFENG16 and HYVANL16s as CreditBuy. Among the cement names, we see some relative value in SHASHU17s15c on a YTC basis. We are cautious on HIDILI15, WINSWY 16 as a result, the recommendations may d
12、iffer and the price targets and estimates of each may vary widely. The financial instruments discussed in this report may not be suitable for all investors and investors must make their own informed investment decisions. Stock transactions can lead to losses as a result of price fluctuations and oth
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