Analyse fra BNP Paribas:
2015 China National People Congress (NPC) will be held from March 5th to 15th: with seven programs in its agenda, the annual NPC will see critical announcements in different areas (growth, investment, corruption, environment, monetary policy). A put butterfly is an appealing strategy in our view: the Stoxx Europe Basic Resources Index (SXPP) is up 13% year-to-date, despite depressed iron ore and base metals prices. Disappointing announcements by the NPC on growth and investments could see SXPP slide. Buy SXPP Apr-15 400-380-360 Put Butterflies at €2.85 offer, Mar- 15 futures ref. €421.30 (indic.) Risk: the risk of buying a put butterfly is limited to the premium paid at inception
2015 NPC will be held from March 5th to 15th in Beijing, economic growth stability will be the key : the second NPC of the current government will have seven programs in its agenda. According to our China Chief Economist Xd Chen, “we have kept pointing out that the growth in 2015 faces far more complications than in the past three years, and we have kept warning investors since Q3 last year the downward pressure on growth rising, and financial risks deteriorating. The top policymakers seem to have admitted more toward our/and market warnings and become increasing aware of the threats of growth breaking the bottom line and economic deflation.” The market consensus is for a 2015 growth target of 7%, down from 7.5% last year. IMF and CASS (China Academy of Social Science) estimate that China’s growth potential is respectively 7.2% and 7.6%. To Xd Chen, “growth downward pressure is large from the traditional growth engines — exports, investment, overcapacity in manufacturing, mining. Manufacturing PMI, though it has lost some indication against actual IP growth, has kept downward trend. The official PMI, CFLP PMI though edged up 0.1ppt in Feb, remained under the parity line of 50. But performance of service industry seems to remain relative better than industrial production. Non-manufacturing PMI retains high to 53.9 in Feb 2015, construction PMI is even high to 56.6 in the same month.” Long Apr-15 put butterflies: while the outcome of the NPC, as well as its impact on SXPP levels, remain uncertain, we would favour small-premium option strategy to put on over the duration of the meeting. A put butterfly strategy would allow investors to position for a surge in its tiny premium in the event SXPP decline, while having a limited loss if SXPP surges. Investors who agree with our view should consider the purchase of SXPP Apr-15 400-380-360 put butterflies at indicatively €2.85 offer, Mar-15 futures ref. €421.30. Risk: the risk of buying a put butterfly is limited to the premium paid at inception. Non-Independent Research – Marketing Communication – For Professional Investors only Equity & Derivative Strategy Europe Antoine Porcheret [email protected] +44 207 595 4410 P
