EM DAILY

Emerging Markets • 10 August 2010

Focus on FOMC meeting tonight

Will the Fed revise the growth forecast lower? Will the Fed ease the monetary policy? The
impact on emerging-market assets.
Turkey (BUY): Lower-than-expected industrial production did not affect the market.
Russia (HOLD): The natural disaster has not affected the rouble.
Mexico (BUY): Inflation met expectations, but market rates declined by 2-5 bp.
Brazil (BUY): Increased speculation on intervention against a strong real.
South Africa (BUY): Increasing equity prices supported the rand yesterday.

EM Daily - Overview
An interest-rate announcement will be made from the US tonight. The meeting tonight will be more
interesting than last time. This is attributable to relatively weak indicators over the past two
months. The question is whether the Fed has changed its growth prospects and whether the Fed will
take action to offset slower growth. If growth is revised lower, the immediate effect on the emerging
markets will be adverse, because the countries are to a varying degree dependent on exports to the
US. However, if the Fed eases the monetary policy in the form of the injection of money into the
system to stimulate the economy, if may offset a downward revision of the growth prospects.

Publisher: Today's economic indicators, events and charts

Jyske Markets Time Country Event Exp. Prior
Vestergade 8 -16 04:00 China Consumer prices July 2.9% y/y
DK - 8600 Silkeborg 04:00 China Retail sales July 18.3% y/y
04:00 China Industrial July 13.7% y/y
Analyst:
Kent Bæk Iversen production
+45 89 89 76 63
KENT_IVERSEN@jyskeba
nk.dk E M B I G lo b al D iver s ified 287 -1 0 C h ar t o f th e d ay
R etur n year -to -d ate 1 2 ,0 4% 7 ,2 5 % S A G B 2 0 2 0 (Y ield to M atur ity)
Translation:
Translation Services 375
Cr e dit sp r e a d 9 ,6
9 ,4
Read more research
325 9 ,2
reports on emerging- 9 ,0
market bonds at 8 ,8
www.jyskemarkets.com 275 8 ,6
8 ,4
8 ,2
225 8 ,0

m ar -2 0 1 0 m aj-2 0 1 0 jul-2 0 1 0 jan-2 0 1 0 m ar -2 0 1 0 m aj-2 0 1 0 jul-2 0 1 0

S h a re s D a il y ch a ng e G o ve rnm e nt b o nd s ( 1 0 ye a r) D a il y ch a ng e
S & P 500 1.128 0 ,55% G e r m any 2,53 0 ,0 1
B r azil B o v e spa 6 7.86 2 -0 ,34% M e xico 6 ,51 -0 ,0 3
P o land W S W W IG inde x 43.185 -0 ,54% Hung ar y 7,10 0 ,0 1

E m e rg ing M a rke t s FX Ta rg e t s ( u p d a t e d 2 7 t h Ju l y)
C u rre ncy Sp ot 3m 6m 12 m C u rre ncy Sp ot 3m 6m 12 m
Disclaimer: E U R CZK 2 4 ,7 7 2 5 ,6 0 2 5 ,5 0 2 5 ,5 0 E U R ZA R 9 ,5 3 9 ,5 3 9 ,5 3 9 ,6 4
Please see the last page
EU R H U F 2 7 8 ,4 2 8 0 ,0 0 2 7 0 ,0 0 2 7 0 ,0 0 EU R MXN 1 6 ,6 4 1 5 ,6 8 1 5 ,8 8 1 5 ,6 3
E U R P LN 3,9 8 3,9 5 3,9 0 3,8 0 U S D CN Y 6 ,7 7 6 ,7 0 6 ,6 0 6 ,4 5
EU R TR Y 1 ,9 7 1 ,9 1 1 ,9 1 1 ,9 3 EU R B R L 2 ,31 2 ,2 5 2 ,2 9 2 ,2 6
EM DAILY
Emerging Markets • 10 August 2010 • Jyske Markets
Central and Eastern Europe
Turkey
We have a BUY recommendation for lira-
denominated bonds. There were only marginal
movements in bond prices yesterday. Market
rates ended largely unchanged and the currency
gained approx. 0.3% against the euro, which is
due to a simultaneous appreciation of the dollar
against the euro.
Yesterday’s industrial production data did not
affect the market. Industrial production more or
less met expectations, i.e. up 10.2% y/y against
an expected increase of 10.5%. In m/m terms,
the industrial production declined by 2.1%; we
had expected an increase.
Over the next week, the price of lira-denominated
bonds will primarily depend on the general mood
in the financial markets. The next important local
news is the central-bank meeting, but it will not
be held until 19 August. It is generally expected
that the central bank will hold interest rates at
7%, but comments on yesterday’s data and the
latest lower-than-expected inflation data may
cause market rates to move.
Russia
The natural disaster in Russia has not adversely
affected the rouble. In fact, it has appreciated
against the currency basket and against the
dollar over the past week (unchanged against the
euro), which is presumably due to a higher oil
price. If the disaster does not come under control
and continues to develop, it is hard to see a
continued appreciation of the rouble.
Latin America
Mexico
We still find Mexican peso bonds attractive, since
we see exchange-rate potential at 3, 6 and 12
months’ term (see targets on the front page).
Inflation was largely as expected in June, i.e.
3.66% against the expected 3.64%. Market rates
fell by 2 bp yesterday. The peso appreciated by
1% against the euro yesterday, which is
attributable to the simultaneous appreciation of
the dollar against the euro.
Brazil
BRL performed well yesterday, appreciating by
0.9% against EUR and by 0.6% against USD. This
development was surprising since several
market participants are beginning to speculate
in initiatives which may weaken BRL against USD
(eg increased intervention).
The speculation was prompted by comments by
the finance minister Guido Mantega who said on
Friday that the government is keeping an eye on
the current level of the USD/BRL rate (1.75). BRL
has appreciated by 7% against USD since the
beginning of February. Mr Mantega regards the
BRL appreciation over recent months as justified,
but takes it that the government would like to
avoid too wide fluctuations in the market.
In our view, the government and the central bank
are happy about the current level of the USD/BRL
rate, but that the government would be reluctant
to see the rate below 1.70. Moreover, we find the
presidential election in October to constitute a
risk, so the potential of BRL against USD is
limited for the short term. Our target for the
USD/BRL rate is 1.83; 1.80 and 1.70 at 3, 6 and
12 months’ term.
Other countries
South Africa
Rising equity prices normally mean appreciation
of ZAR. Such was also the case yesterday when
the leading global equity indices rose by about
0.5-1.5%, and ZAR was actually one of the top
performers in the emerging markets, gaining
1.2% against EUR and 0.7% against USD.
Since early July, South African market rates have
fallen nicely (cf. Chart of the day on the front
page). For instance, the yield to maturity on our
favourite bond 7.25% SAGB 2020 fell from 8.91%
to currently 8.34%.
We expect South African market rates to
continue their fall, because a surprise interest-
rate cut may be the outcome, if inflation
continues to decline. In six out of seven inflation
surveys the inflation number was lower than
expected. The inflation rate has fallen from 6.2%
at the beginning of the year to currently 4.2%.
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EM DAILY
Emerging Markets • 10 August 2010 • Jyske Markets

EMBI Global Diversified Index

Instr um e nt D aily R e t. (% ) M T D R e t. (% ) YT D R e t. (% ) C r e dit S pr e ad M ar k e t C ap. (% )
(bp)

EM B I G lo b a l D ive rs ifie d 0 ,6 2 1 ,9 9 1 2 ,0 4 287 1 0 0 ,0 0

R e g io n
L a tin 0 ,7 6 2 ,2 9 1 3 ,5 0 333 4 0 ,6 9
As ia 0 ,6 7 1 ,5 4 1 2 ,1 2 188 2 0 ,6 0
Eu ro p e 0 ,5 3 2 ,2 2 1 0 ,9 9 250 2 8 ,6 2
Afric a 0 ,3 2 1 ,7 3 9 ,5 7 316 5 ,3 0
M id d le Ea s t 0 ,1 3 0 ,4 3 8 ,0 6 384 4 ,7 9
C o untr y
Arg e n tin a 1 ,6 4 5 ,4 8 - 666 2 ,3 7
P anam a 1 ,4 7 2 ,6 5 - 155 3 ,4 7
C o lo m b ia 1 ,3 1 2 ,3 1 1 4 ,2 9 154 4 ,7 8
U kra in e 1 ,1 7 1 ,3 7 3 2 ,1 4 470 2 ,4 4
P e ru 1 ,1 0 3 ,0 5 1 6 ,1 6 145 3 ,6 7
In d o n e s ia 0 ,9 2 2 ,2 2 1 4 ,7 9 188 6 ,4 2
B ra z il 0 ,9 2 1 ,9 4 - 19 3 7 ,8 3
Tu rke y 0 ,8 6 2 ,3 0 1 0 ,1 0 216 7 ,1 4
U ru g u a y 0 ,7 8 1 ,7 9 1 6 ,6 9 20 9 2 ,6 6
M e xic o 0 ,7 5 2 ,3 7 1 3 ,5 0 16 6 7 ,1 7
P h ilip p in e s 0 ,6 9 1 ,6 4 1 3 ,1 3 19 1 6 ,8 7
L ith u a n ia 0 ,6 4 2 ,1 9 - 285 1 ,6 0
M a la ys ia 0 ,6 3 1 ,1 4 8 ,4 0 143 3 ,4 8
Ira q 0 ,6 0 1 ,6 3 1 5 ,0 4 433 0 ,9 5
R u s s ia 0 ,5 0 2 ,1 6 8 ,6 4 228 7 ,3 4
Gabon 0 ,4 7 1 ,8 7 1 0 ,5 2 40 5 0 ,4 0
G hana 0 ,4 6 2 ,0 9 1 2 ,6 9 443 0 ,3 5
C h ile 0 ,3 9 0 ,3 5 5 ,9 6 132 1 ,9 9
Ka z a kh s ta n 0 ,3 3 3 ,3 8 - 278 3 ,1 8
Eg yp t 0 ,3 3 2 ,8 7 7 ,8 8 236 0 ,6 6
S o u th Afric a 0 ,3 0 1 ,3 8 9 ,6 4 155 3 ,0 5
C h in a 0 ,2 8 0 ,5 8 6 ,5 7 77 2 ,0 9
Vie tn a m 0 ,2 7 1 ,1 1 1 5 ,4 5 259 0 ,8 0
H u n g a ry 0 ,1 7 3 ,7 4 4 ,3 5 30 0 1 ,4 7
S ri L a n ka 0 ,1 3 0 ,7 3 8 ,1 4 350 0 ,4 5
P o la n d 0 ,0 3 1 ,3 6 7 ,4 3 16 0 2 ,9 5
Ec u a d o r 0 ,0 3 0 ,2 3 0 ,7 0 10 46 0 ,2 4
Ja m a ic a 0 ,0 2 0 ,1 9 4 0 ,4 3 523 0 ,1 9
B u lg a ria 0 ,0 2 1 ,0 2 4 ,5 7 26 5 0 ,6 1
B e liz e 0 ,0 2 0 ,7 8 5 0 ,7 5 79 6 0 ,1 8
G e o rg ia 0 ,0 2 0 ,1 6 6 ,1 5 529 0 ,2 1
P a kis ta n 0 ,0 2 -0 ,0 5 2 0 ,5 3 579 0 ,4 9
S e rb ia 0 ,0 2 0 ,0 1 4 ,1 4 453 0 ,4 3
Le b a no n 0 ,0 2 0 ,1 4 - 36 1 3 ,8 5
Tu n is ia 0 ,0 2 0 ,3 7 4 ,8 7 10 4 0 ,3 0
C ro a tia 0 ,0 2 2 ,5 1 6 ,2 5 26 9 1 ,2 4
El S a lva d o r -0 ,0 5 2 ,4 7 1 0 ,7 5 344 1 ,4 0
D o m in ic a n R e p u b lic -0 ,2 8 1 ,9 0 1 2 ,5 1 382 0 ,6 3
Ve n e z u e la -0 ,8 7 1 ,5 6 1 1 ,8 6 10 83 4 ,1 1

The EMBI Global Diversified

The EMBI Global Diversified Index is a JP Morgan Chase index, which covers the aggregate return on USD-denominated bonds
issued by emerging market countries and government bodies. This includes Brady bonds, loans, Eurobonds and local
instruments. 39 countries are covered. The expression ‘diversified’ means that the weightings of the individual countries are
reduced, and the Index is therefore an excellent tool for Danish institutional investors. All returns are in USD. Past performance
is not a reliable indicator of future performance. The gains may increase or decline as a result of exchange-rate fluctuations.

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EM DAILY
Emerging Markets • 10 August 2010 • Jyske Markets

GBI EM Diversified
In s tru m e n t D a ily R e tu rn D K K (% ) M T D R e t. D K K (% ) YT D R e t. D K K (% ) Yie ld (% ) D u ra tio n (y ) M a rk e t C a p (% )
GB I EM D iv ers ified 0 ,5 9 0 ,2 2 1 8 ,1 3 6 ,2 6 4 ,5 5 1 0 0 ,0 0
R e g io n
M ideas t & Africa 0 ,8 7 -0 ,3 0 2 0 ,6 0 8 ,2 2 5 ,6 5 1 0 ,8 9
Latam 0 ,8 7 0 ,0 5 2 2 ,1 3 7 ,0 3 5 ,9 8 2 9 ,1 1
As ia 0 ,6 1 -0 ,3 4 2 1 ,5 0 3 ,4 6 5 ,0 4 2 0 ,0 0
Eu ro p e 0 ,3 2 0 ,7 5 1 2 ,7 0 6 ,4 4 2 ,9 7 4 0 ,0 0
C o u n try
B razil 1 ,2 0 1 ,2 3 1 8 ,4 8 9 ,6 0 6 ,1 8 5 ,4 6
P eru 0 ,8 4 0 ,7 2 1 5 ,1 7 5 ,9 9 8 ,7 1 6 ,4 6
B razil B ro ad 0 ,8 1 -1 ,0 0 1 7 ,4 2 1 1 ,6 4 2 ,4 4 3 ,0 0
M exico 0 ,8 0 -1 ,5 9 2 4 ,9 5 6 ,4 5 4 ,9 6 1 0 ,0 0
Thailan d 0 ,7 1 -0 ,4 9 2 0 ,5 9 3 ,3 3 5 ,8 5 1 0 ,0 0
C o lo m b ia 0 ,6 7 2 ,3 2 4 3 ,2 0 5 ,8 3 6 ,5 0 4 ,1 9
Tu rk ey 0 ,5 6 -0 ,4 1 1 8 ,6 6 8 ,4 3 2 ,0 4 1 0 ,0 0
M alay s ia 0 ,5 0 -0 ,2 0 2 2 ,3 3 3 ,6 4 4 ,2 3 1 0 ,0 0
S o u th Africa 0 ,4 7 -0 ,2 4 2 1 ,5 9 8 ,2 1 6 ,0 0 1 0 ,0 0
Egy p t 0 ,4 3 -0 ,9 4 1 0 ,4 3 8 ,7 4 1 ,7 4 0 ,8 9
Hu n gary 0 ,3 9 2 ,8 5 4 ,1 9 6 ,8 7 3 ,7 8 1 0 ,0 0
P o lan d 0 ,3 6 0 ,7 2 8 ,4 4 5 ,4 0 3 ,8 6 1 0 ,0 0
R u s s ia -0 ,0 5 -0 ,1 8 1 9 ,5 1 5 ,9 9 2 ,2 0 1 0 ,0 0

In s tru m e n t D a ily R e tu rn U S D (% ) M T D R e t. U S D (% ) YT D R e t. U S D (% ) Yie ld (% ) D u ra tio n (y ) M a rk e t C a p (% )

GB I EM D iv ers ified 0 ,2 4 1 ,9 0 8 ,9 1 6 ,2 6 4 ,5 5 1 0 0 ,0 0
R e g io n
M ideas t & Africa 0 ,5 2 1 ,3 7 1 1 ,1 8 8 ,2 2 5 ,6 5 1 0 ,8 9
Latam 0 ,5 2 1 ,7 2 1 2 ,6 0 7 ,0 3 5 ,9 8 2 9 ,1 1
As ia 0 ,2 6 1 ,3 2 1 2 ,0 2 3 ,4 6 5 ,0 4 2 0 ,0 0
Eu ro p e -0 ,0 3 2 ,4 3 3 ,9 0 6 ,4 4 2 ,9 7 4 0 ,0 0
C o u n try
S o u th Africa 1 ,1 6 1 ,4 3 1 2 ,1 0 8 ,2 1 6 ,0 0 1 0 ,0 0
B razil 0 ,8 5 2 ,9 3 9 ,2 3 9 ,6 0 6 ,1 8 5 ,4 6
P eru 0 ,4 9 2 ,4 1 6 ,1 8 5 ,9 9 8 ,7 1 6 ,4 6
B razil B ro ad 0 ,4 6 0 ,6 5 8 ,2 5 1 1 ,6 4 2 ,4 4 3 ,0 0
M exico 0 ,4 5 0 ,0 6 1 5 ,2 0 6 ,4 5 4 ,9 6 1 0 ,0 0
Thailan d 0 ,3 6 1 ,1 8 1 1 ,1 7 3 ,3 3 5 ,8 5 1 0 ,0 0
C o lo m b ia 0 ,3 2 4 ,0 3 3 2 ,0 2 5 ,8 3 6 ,5 0 4 ,1 9
Tu rk ey 0 ,2 1 1 ,2 6 9 ,4 0 8 ,4 3 2 ,0 4 1 0 ,0 0
M alay s ia 0 ,1 5 1 ,4 7 1 2 ,7 8 3 ,6 4 4 ,2 3 1 0 ,0 0
Egy p t 0 ,0 9 0 ,7 1 1 ,8 1 8 ,7 4 1 ,7 4 0 ,8 9
Hu n gary 0 ,0 4 4 ,5 7 -3 ,9 4 6 ,8 7 3 ,7 8 1 0 ,0 0
P o lan d 0 ,0 1 2 ,4 0 -0 ,0 3 5 ,4 0 3 ,8 6 1 0 ,0 0
R u s s ia -0 ,4 0 1 ,4 9 1 0 ,1 8 5 ,9 9 2 ,2 0 1 0 ,0 0

The Global Bond Index – Emerging Markets Diversified is designed by JP Morgan Chase. It tracks local emerging market
debt and consists of regularly traded, liquid fixed-rate, domestic currency government bonds. 13 countries are included. The
expression ‚diversified‛ means that the weightings of the individual countries are reduced and is therefore an excellent tool
for Danish institutional investors. All returns are in DKK. Past performance is not a reliable indicator of future performance.

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Emerging Markets • 10 August 2010 • Jyske Markets

Disclaimer & Disclosure

Jyske Bank is supervised by the Danish Financial Supervisory Authority.

The research report is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility
for the correctness of the material nor any liability for transactions made on the basis of the information or the estimates of
the report. The estimates and recommendations of the research report may be changed without notice. The report is for the
personal use of Jyske Bank's customers and may not be copied.

This is a recommendation and not an in-depth investment report.

Conflicts of interest
Jyske Bank has prepared procedures to prevent conflicts of interest. These procedures have been incorporated in the business
procedures covering the research activities of Jyske Markets, a business unit of Jyske Bank.

Jyske Bank's emerging-market analysts may not hold positions in the instruments for which they independently prepare
research reports. Jyske Bank may, however, hold positions, have interests in or business relations with the instruments that
are analysed. The analysts receive no payment from persons interested in individual research reports.

Read more about Jyske bank's policy on conflicts of interest at www.jyskebank.dk/terms.

Risk associated with the bond

Investment in an emerging-market bond involves risk. Many factors, including the country’s credit quality, willingness to pay,
liquidity, social conditions and economic development may affect the price of the bond. Indirect factors may also affect the
price of the bond, for instance global economic factors, global risk tolerance and geopolitical risks. See the research report for
our view on the risk. The risk factors stated in the report should not be regarded as exhaustive.

FX risk
If the bond is traded in a currency other than the investor’s base currency (this is often the case), the investor accepts an FX
risk. The FX risk is in many cases affected by the same factors as the bond (see above). We will assess the FX risk where we find
it necessary. The FX risk factors stated in the research report should not be regarded as exhaustive.

Update of regular research reports

We update EM Daily every day. We update EM Outlook every week. We update EM Recommendations at least once a week.
Our view of the individual countries will be updated on a regular basis in these publications. See the front page of the research
report for the date of the latest update.
http://www.jyskebank.dk/finansnyt/obligationer/emergingmarkets/markedskommentarer/dagenskommentar/emerging
marketsdaily/168988.asp?refId=118973
http://www.jyskebank.dk/_jb/asp/apps/markets/meta_docs.asp?metaname=Skabelon&metavalue=JM_Makro_EM&do
cs=10&shadowID=255531
http://finansnyt/_jb/default.asp#http://finansnyt/udlobligationer/emergingmarkets/emrecommendations/2324
90.asp

Update of separate research reports

Separate reports are not updated. A new research report will be published when we find it necessary. This will often be the
case when there are significant changes which are relevant for investors. This includes changes in the recommendation, a
significant change of the risk associated with the bond or a significant change in FX risk. See the front page of the report for
the date when the research report was published. Separate recommendations are only published once.

http://www.jyskebank.dk/_jb/commoninc/apps/markets/forside.asp?fagomr=Obl_EM&visfrasite=3&shadowID=113566

Trading prices
All prices stated are the latest trading prices at the time of the release of the research report, unless otherwise stated.