全球策略量化宽松建设一个强有力加码

12AugustEquityResearchInvestmentGlobalEquity12AugustEquityResearchInvestmentGlobalEquityResearchAndrew44207883Robert44207883Nicolas4420788344207888mengyuan.yuan@credit-Asim44207883FiscalQE&construction–astrongWebelieveconstructionisaclear-cutoverweightinEurope,and'fiscalQE'—centralbankfinancingoffiscalprojectsindirectlyordirectly—willbeusedinthenextrecessiontofinanceconstruction.■Constructionstilldepressed:Constructionspendingis7%and13%belowitsnorminEuropeandtheUS,respectively.ConstructionconfidenceisatrecordhighsinEurope,implyingc4%growthinconstructionspend.Shortageofpublicinfrastructure:Inmostdevelopedeconomies,publicinfrastructureinvestmentisc30%belowitsnorm(andtheGlobalInfrastructureHubbelievesthisneedstoriseto3.6%ofGDPfrom2.9%).IntheUS,theinfrastructureshortfallby2040requiresac25%increaseinnon-residentialconstructionspending.Thereareclearexamplesindevelopedmarketsofspendingpickingup(Canada,theJunckerPlaninEurope,theUK).InGEM,theshortfallisevengreaterthanDMandlevelsofgovernmentdebttoGDParemuchlower.Accordingly,manyGEMcountrieshavelargeinfrastructureplans(e.g.IndiaandIndonesiatogetherplantospend$1.8tnby2024).Residential:IncoreEurope,mostmortgagesarefixed,andthemortgagerateisnowevenfurtherbelowtherentalyield,drivinguphouseprices.Thisusuallymeansstrongerhousingactivity,actingasacounter-cyclicalhedge.FiscalQE:Thefallinbondyieldshasmeantgovernmentshavemorefiscalleeway(weestimateGermanycouldincreasespendingbyc5%ofGDPbeforegovernmentdebttoGDProse).Japanhasnetgovernmentdebt3xhigherthanEurope.Thekeyisthatifthereisarecession,realratesneedtofallby5pp,butcan’t.Theonlyalternativeweseeiscentralbanksdirectlyfinancingspending.Infrastructurespendingisprofitable,withamultiplierof1.7x,andcanemployworkersfromdisruptedindustries.ModernMonetaryTheoryprovidessomeintellectualsupportforthis.Politically,thisappearseasiestintheUKandJapanbutalsopossibleinEurope(usingtheEIB).TherisingpoliticalforceofGreenpartieswilllikelypushforadditionalmoneytobespentonprojectsthatreduceCO2(railways,insulation,renewables).OurscorecardidentifiesGermany,CanadaandtheUKasthedevelopedmarketswiththegreatestscopetoincreaseinfrastructure.Howtoplaythis?Infrastructure-andconstruction-relatednamesthatlookcheaponCreditSuisseHOLT®andhavepositiveearningsrevisionsincludeEaton,IngersollRand,SchneiderandLafarge.CementlookscheaponP/B:wenoteLafarge,SemenIndonesia,JamesHardieandCemex,whilewewouldalsofocusonconstruction-exposedcapitalgoodswithanenergyefficiencyangle(suchasSchneider,HalmaandAcuity).Wealsoscreenforconcessionairesandinsulationstocks.■■■■■DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.每日免费每日免费获取报关注公回复：研究报加入“起点财经”微信群。12AugustFiscalQE–thenextBackinDecember2018(see2019ResearchOutlook:Themes,SectorsandStyles)andOctober2017(seeConstruction:aclearcutoverweight)wewroteonfiscalQEandarguedthatitwasthenecessarynextstepduetoinsufficientmonetaryflexibilityonthepartofcentralbanks.Wereviewwhywethinkwearegettingclosertothismomentandwhywecontinuetohaveastructuralaswellastacticaloverweightofconstruction-relatednames.WhyweareoverweightWeremainoverweightconstructionforthefollowing1.Construction12AugustFiscalQE–thenextBackinDecember2018(see2019ResearchOutlook:Themes,SectorsandStyles)andOctober2017(seeConstruction:aclearcutoverweight)wewroteonfiscalQEandarguedthatitwasthenecessarynextstepduetoinsufficientmonetaryflexibilityonthepartofcentralbanks.Wereviewwhywethinkwearegettingclosertothismomentandwhywecontinuetohaveastructuralaswellastacticaloverweightofconstruction-relatednames.WhyweareoverweightWeremainoverweightconstructionforthefollowing1.ConstructionasashareofGDPremainsbelowitshistoricalFigure2:ConstructionasashareofGDPisbouncingoff20-yearlowsinEU19andisbelowitsnormelsewhere Figure1:Constructionasashareof ConstructionInvestment,as%ofEU19,19961998200020032007201220142016Source:Refinitiv,CreditSuisseSource:Refinitiv,CreditSuisseShouldconstructionasaproportionofGDPreturntoits24-yearaverage,wewouldexpecttoseea7%increaseininvestmentintheEUand13%intheUS.Constructionconfidenceisclosetoa20-yearhighinEurope,suggestingconstructiongrowthshouldbearound4%year-on-yearintheeuroarea.2Constructioninvestmentasa%of Averagesince95 12AugustFigure3:Europeanconstructionconfidenceremainsneara20-yearhigh,consistentwith4%YoYgrowth 0ConstructionEuroareaconstruction,y/ySource:Refinitiv,CreditSuisse2.TheshortageofpublicTheGlobalInfrastructureHub(GIH)setupbytheG20estimatesthatinfrastructureexpenditureasashareofGDPneedstorisefromc2.9%to3.6%perannumgloballytomeeta$15tnshortfallininvestmentby2040(whichisthedifferencebetweenprojectedneedsandcurrenttrendlevels),withafurther$3.5tntomeettheUN’sSustainableDevelopmentGoals(e.g.SDG6,SDG7.1:universalaccesstoelectricity,water,andWecanseebelowthatgeneralgovernmentinvestmentasashareofGDPissome30%belowhistoricalaveragelevelsinmostcountries.Figure4:Publicinfrastructurespendinghasbeendecliningovertime… Figure5:…withmanymajordevelopedmarketsspendingaround30%belowtheirnorm(since1960)Generalgovernmentinvestment%ofGDP-12AugustFigure3:Europeanconstructionconfidenceremainsneara20-yearhigh,consistentwith4%YoYgrowth 0ConstructionEuroareaconstruction,y/ySource:Refinitiv,CreditSuisse2.TheshortageofpublicTheGlobalInfrastructureHub(GIH)setupbytheG20estimatesthatinfrastructureexpenditureasashareofGDPneedstorisefromc2.9%to3.6%perannumgloballytomeeta$15tnshortfallininvestmentby2040(whichisthedifferencebetweenprojectedneedsandcurrenttrendlevels),withafurther$3.5tntomeettheUN’sSustainableDevelopmentGoals(e.g.SDG6,SDG7.1:universalaccesstoelectricity,water,andWecanseebelowthatgeneralgovernmentinvestmentasashareofGDPissome30%belowhistoricalaveragelevelsinmostcountries.Figure4:Publicinfrastructurespendinghasbeendecliningovertime… Figure5:…withmanymajordevelopedmarketsspendingaround30%belowtheirnorm(since1960)Generalgovernmentinvestment%ofGDP-%below196019641968197619801988199220042008Source:Refinitiv,IMF,CreditSuisseSource:Refinitiv,CreditSuisse312AugustIntheUS,theaverageageofinfrastructureisincreasingsteadilyandtotalunderinvestment(differencebetweentrendandrequirement)basedonnumbersfromOxfordEconomicsisclosetocumulative$3.9tnlookingto2040(or0.7%ofGDPwhichaddsnearly25%tototalnon-residentialconstructionexresources),althoughmoreconservativeestimatesfromMcKinseyshowthenetfundinggaptobecloserto$0.5tnlookingto2035.Thisislargelydrivenbytheneedforextrainvestmentinhighwaysandbridgestoaddresscongestionfromrisingtrafficlevels(whichwouldotherwisealsoactasadragongrowthasanindirecteconomiccost).Figure7:…andthefundinggapisrunningat$3.9tnlookingto2040 Figure6:USinfrastructureis AverageageofGovernmentFixedTotal0Source:BEA,CreditSuisseSource:Oxfordeconomics,CreditSuisseThisisinageneralcontextwherethenon-residentialinvestmentshareofGDPintheUSremains12%belowitsnorm.Figure8:Non-residential(ex.Oil&mining)investmentshareofGDPremainsatlowlevelsintheUS USnonresidential12AugustIntheUS,theaverageageofinfrastructureisincreasingsteadilyandtotalunderinvestment(differencebetweentrendandrequirement)basedonnumbersfromOxfordEconomicsisclosetocumulative$3.9tnlookingto2040(or0.7%ofGDPwhichaddsnearly25%tototalnon-residentialconstructionexresources),althoughmoreconservativeestimatesfromMcKinseyshowthenetfundinggaptobecloserto$0.5tnlookingto2035.Thisislargelydrivenbytheneedforextrainvestmentinhighwaysandbridgestoaddresscongestionfromrisingtrafficlevels(whichwouldotherwisealsoactasadragongrowthasanindirecteconomiccost).Figure7:…andthefundinggapisrunningat$3.9tnlookingto2040 Figure6:USinfrastructureis AverageageofGovernmentFixedTotal0Source:BEA,CreditSuisseSource:Oxfordeconomics,CreditSuisseThisisinageneralcontextwherethenon-residentialinvestmentshareofGDPintheUSremains12%belowitsnorm.Figure8:Non-residential(ex.Oil&mining)investmentshareofGDPremainsatlowlevelsintheUS USnonresidentialconstructionex.oil&mining,%ofSource:Refinitiv,CreditSuisse42016-2040USinfrastructure CurrentTrends expenditure(asa%ofGDP) 12August3.Clearexamples12August3.ClearexamplesofanideologicalshiftindevelopedWebelievethereisashiftwithingovernmentstonotonlybewillingtorunlargerbudgetdeficits(tobediscussedlaterinthisreport)butalsotofocusmoreoninfrastructurespending.Forexample:■Canada:TheCanadiangovernmentisplanningtoinvestC$180bnintoCanadianinfrastructureunderits"InvestinginCanada"planovera12-yearperiodendingin2028.Thiswouldmorethandoubleexistingfundingpledgedbypreviousgovernments.Furthermore,theCanadaInfrastructureBankhasbeencreatedtosupportprivateinfrastructureprojectsdeemedtobeinthepublicinterestoutsideofthegovernment-allocatedprojects.TheCanadianFederalGovernmentprovidedaninitialC$35bnofseedcapitalatthetimeoffounding,whichithopestoleveruptototalinvestmentsofC$175bn(C$4ofprivateinvestmentforeveryC$1).ContinentalEurope:InrelationtotheJunckerPlan,theEuropeanCommissionannouncedinJune2019that€75bninfinancing(fromtheEuropeanFundforStrategicInvestmentsactingasguarantorforfirstloss,formedfromtheEUbudgetandtheEIB)hadmobilized€410bn(c2.5%ofGDP)inadditionalinvestmentacrosstheall28memberstates,withrelativelygreaterfinancingtotheperiphery.Ofthis,theEuropeanInvestmentBank(EIB)wasresponsibleforapproving€55.2bn(generatinganadditional€252.5bn)infinancingforinfrastructureandinnovationprojects,rangingfromtheconstructionofadditionalregionalairportsinGreecetothesustainableredevelopmentofpollutedsitesinFranceandBelgium(GinkgoFundII).Furthermore,inJune2018,theCommissionannouncedthecreationoftheInvestEUProgramme(2021–2027)tocontinuetoclosetheinvestmentgapintheEUoncetheInvestmentPlanforEurope(JunckerPlan)comestoaconclusionin2020.Thisisexpectedtocrowdinatleast€650bnininvestmentovertheeightyears.Germany:Inaddition,withGermanynowexpectedtohaveafiscalsurplusof0.75%ofGDPin2019,thereisincreasingpressureforthistobespentoninfrastructure.InMarch,FinanceMinisterOlafScholzsetaside€150bnforinfrastructure,education,housing,digitaltechnologyinvestmentuntil2023.Moreover,arecentreportbyReuterssuggeststhegovernmentcoalitionisplanningtoincreasefiscalspendingtotargetclimatechange.InearlyJune,CNBCquoteda55%chanceoftheGrandCoalitionbreakingdown,whichinturncouldleadtoacoalitioninvolvingtheChristianDemocraticUnionandChristianSocialUnionparties,andtheGreens,whohavealreadyreleasedapapercriticizingtheGermandebtbrakeandlackofinfrastructureinvestmentinthepastdecade.TheUK:TheUKcurrentlyhasinfrastructureandconstructionprojectsworth£600bninthepipeline;assetoutintheConstructionSectorDealpublishedbytheDepartmentforBusiness,Energy,andIndustrialStrategyinJuly2018.InhisSpringStatement,ex-ChancelloroftheExchequer,PhilipHammond,reiteratedhiscommitmenttofindingaviablesourceoffinancingtosustaintheseprojectsafterendingtheprivatefinancinginitiative(PFI)lastyear.SajidJavid,thecurrentChancellor,pledgedtocreatea£100bninfrastructurefundduringhisleadershipcampaign.Moreover,ontheothersideofthepoliticaldivide,theLabourPartyhasstatedthattheywouldcreateaNationalTransformationFund(NTF)toinvest£250bnover10yearsintoinfrastructureupgrades.Japan:DespitetheVAThikescheduledforOctoberthisyear,oureconomistsstillexpectanetexpansionaryfiscalpolicythisyear,withnearlyhalftheestimatedrevenuefromthetaxhikegoingtowardsexpenditureonpublicworks(newpublicworksof$68.4bnwereformulatedinFY18tobedistributeduntilFY20).Onaseparatenote,JapanremainsthesinglelargestbackerforinfrastructureprojectsinSoutheastAsia,withprojectsworth$367bncomparedwith$255bnbyChina(SCMP,23Jun).■■■■512AugustUS:ThereappearstobeappetiteonbothsidesofthepoliticalaisleintheUStopushforapro-infrastructurefederalspendingbill,withabroadconsensusontheneedtorebuildandexpandUSinfrastructuretoboostgrowthandcreatejobs.AttheendofApril,Democraticcongressionalleadersannouncedthattheyhadagreedona$2tninfrastructureplan,lookingathighways,railroads,bridges,andbroadband,markingsomeconcreteprogressonaTrumpcampaignpromiseofatrillion-dollarinfrastructureinvestmentpush.SofarthishasnotbeenapprovedbyCongress,andcross-partynegotiationslaterbrokedowninMay;however,theremaybebetterpoliticaltimingforpassingsuchabillafterthe2020elections.Figure9:DMProjectAllocationestimatesareblueSource:Refinitiv,CreditSuisse4.EvengreaterneedforinfrastructureinvestmentinThe'investmentgap'betweendemandandsupplyforinfrastructureseesDevelopingAsiarequiringatotalof$22.6tn(c30%ofcurrentglobalGDP)inadditionalinvestmentby2030onADB(AsianDevelopmentBank)numbersandtheChinaOneBeltOneRoadInitiativeinitiallywouldrequire$5trnofinfrastructureexpenditure,accordingtoPwC,althoughthishasclearlybeenscaledback.ManyAsiancountriesstillhavelowgovernmentdebttoGDP,andthusshouldhavetheabilitytofinancethisspending.Figure10:Emergingmarketsareevenmoreinneedofinfrastructurespending… Figure11:…andtheyhavefiscalcapacitytospendonit GEMcountriesgovernment12AugustUS:ThereappearstobeappetiteonbothsidesofthepoliticalaisleintheUStopushforapro-infrastructurefederalspendingbill,withabroadconsensusontheneedtorebuildandexpandUSinfrastructuretoboostgrowthandcreatejobs.AttheendofApril,Democraticcongressionalleadersannouncedthattheyhadagreedona$2tninfrastructureplan,lookingathighways,railroads,bridges,andbroadband,markingsomeconcreteprogressonaTrumpcampaignpromiseofatrillion-dollarinfrastructureinvestmentpush.SofarthishasnotbeenapprovedbyCongress,andcross-partynegotiationslaterbrokedowninMay;however,theremaybebetterpoliticaltimingforpassingsuchabillafterthe2020elections.Figure9:DMProjectAllocationestimatesareblueSource:Refinitiv,CreditSuisse4.EvengreaterneedforinfrastructureinvestmentinThe'investmentgap'betweendemandandsupplyforinfrastructureseesDevelopingAsiarequiringatotalof$22.6tn(c30%ofcurrentglobalGDP)inadditionalinvestmentby2030onADB(AsianDevelopmentBank)numbersandtheChinaOneBeltOneRoadInitiativeinitiallywouldrequire$5trnofinfrastructureexpenditure,accordingtoPwC,althoughthishasclearlybeenscaledback.ManyAsiancountriesstillhavelowgovernmentdebttoGDP,andthusshouldhavetheabilitytofinancethisspending.Figure10:Emergingmarketsareevenmoreinneedofinfrastructurespending… Figure11:…andtheyhavefiscalcapacitytospendonit GEMcountriesgovernmentdebttoNorthAdvancedAdvancedEMEmergingRoaddensity(kmper100Sub-Saharan 12Source:Refinitiv,CreditSuisseSource:Refinitiv,CreditSuisse6UnitedStatesUnitedCzechRepublicSaudiInfrastructureprojectsummary:Allocation %of 260 1.2 Partially 170 Setasidefrom 850 Totalinfrastructure(private gov)&68 Tobe Notapproved,2 Infrastructure notimeline12AugustWehaveseenthe12AugustWehaveseenthefollowingexamplesofapick-upininfrastructurespendacross■India:Modi’sBharatiyaJanataParty(BJP)promised$1.44tnininvestmentby2024intheirmostrecentelectionmanifesto,planningondoublingthelengthofhighwaysandaddinglargecommercialairportsnationwide.ThiswasthenreiteratedintheJuly5thbudgetbyFinanceMinisterNirmalaSitharaman,withthegovernmentstatingitsintentiontoexpandPublic-PrivatePartnershipstoraiseprivatecapitaltofinancetheirpushtodevelopandconnectruralIndia.OurIndiaanalystsexpectanincreaseingovernmentinfrastructureinitiativesinthesecondhalfof2019followingtheconclusionofthePresidentialelection.Indonesia:TheIndonesianNationalDevelopmentandPlanningAgencyreleasedaproposalinMayfor$412bnininfrastructureinvestmentoverthenextfiveyears.PresidentJokoWidodoexpressedconfidenceatbeingabletopushhispolicyproposalsthroughafteranearly8-pointvictoryinthemostrecentelectionsinApril.OurIndonesiaanalystsexpectinfrastructureandruraldevelopmenttocontinuetobeafocusforthegovernmentgoingforward.Taiwan:Onthebackofitsspecialbudget,Taiwan’sparliamentinJulypasseda$12bninfrastructurestimulusplan(theForward-lookingInfrastructurePlan–FIP)tobeimplementedoverthenextfouryears(c.2%ofGDP),withafocusonupgradestorail,waterandgreenenergy.ThiswouldincreaseTaiwan’sinfrastructurespendingbynearly30%to$14bnannually.Malaysia:FollowinglongstandingPrimeMinisterNajib’sdefeatinMaylastyear,PrimeMinisterMahathir(returningtooffice)cancelledtwomajorinfrastructureprojectsbackedbyChina(worthover$22bn)asapushbacktoChina’sgrowinginfluenceintheregion.IncombinationwithpossiblefiscaltighteningfromtheMahathiradministration,therewasincreasinguncertaintyaroundthefutureoflargeinfrastructureprojectsplannedinMalaysia.However,inMarchthisyeartheadministrationannounced20newinfrastructureprojectsworth$1.3bn,andtheninAprilannouncedthattheEastCoastRailwayLinkhadbeenrenegotiatedwithChina,moderatingthesepreviousconcerns.Turkey:TheAsianInfrastructureInvestmentBank(AIIB)hasmadeloanandfinancingcommitmentsamountingto$7.5bnsince2016andexpectstoapproveanadditional$4bnbytheendofthisyearonTurkishprojects.PwCalsoestimatesthatthegovernment’s2023Visionoutlinesaroadmapfor$325bnininvestment(publicandprivate)oncapitalprojectsandinfrastructurebetween2017and2023.Korea:Despitehavingoneofthemostadvancedinfrastructuresetupsintheregion,SouthKoreahascommittedtospendingnearly$0.8bnoninfrastructureinvestment,inadditionto$2.8bnfromSouthKoreancompaniesacross56separateprojectsin2019China:InApril,theNationalDevelopmentandReformCommission(NDRC)inChinaannounceditsgoalofincreasingtheurbanizationrateby1%bytheendof2019byrelaxingrestrictionsonhouseholdregistrationpermits(withanoverallaimtoincreaseurbanizationto67%by2030from59%today).Projectapprovalstofacilitatethishavefollowed,withtheNDRCapproving$68.6bnoffixedassetinvestmentsinthefirsthalfofthisyearincontrastto$37.8bnin1H2018.Furthermore,on10JunetheChinesegovernmentissuedanoticeonlocalgovernmentspecialbondissuance,allowingthesebondstobeusedasequitycapitalinqualifiedmajorprojects,easingpressureonlocalgovernmentleverageratios.Sincethen,bothlocalandspecialgovernmentbondissuancehaspickedupverysharply.Asaresultofthis,ourChinaequitystrategistsnowbelievethatinfrastructureinvestmentwillincreaseto10%thisyearcomparedtojust3.8%lastyear.■■■■■■712AugustInadditiontodomesticinfrastructureneeds,ChinacontinuestopressaheadwiththeBeltandRoadInitiative(BRI),withChinasigningmemorandaofunderstandingwithPortugal(December2018)andmorerecentlyItaly(March2019),coveringinfrastructureinvestmentsintheircountries.Wemustnotethatoverallinvestmentestimatesvarywidelyfrom$1tn(CentreforStrategicandInternationalStudies,CSIS)to$4tn(PwC);anduncertaintyaroundthetradewarandpoliticalissuesaroundChinesefinancing(e.g.,Malaysia)arelikelytoplayamajorroleinthescaleoftheBRIinthecomingyears.■Mexico:MexicanPresidentAndrésManuelLopezObradorranonaticketofincreasinginfrastructurespendingasaformofeconomicstimulus,pledgingtoincreasegrossfixedinvestmentto25%ofGDP(from20%currently).HishaltingofconstructiononthenewMexicoCityairport(NuevoAeropuertoInternacionaldelaCiudaddeMéxico),whichreceivedsignificantattentionowingtotheinvolvementofinternationaldebtholders,wasdrivenbysociopoliticalconcernsregardingtheimpactoftheprojectandtiestothepreviousadministration,andthuswebelievedoesnotcontradictthispro-infrastructureBrazil:Brazil’spoorqualityofinfrastructure,notonlywithinLatAmbutalsoglobally,ledtothecreationoftheInvestmentPartnershipsProgram(IPP)in2016,coordinatingprojects,deliveringconcessions,andprivatizingassetsinordertoboostinfrastructurequality.Inthethreeyearssince,193projectsqualifiedfortheprogramme,translatingtoanestimated$68bnininvestmentoverthecomingyears.■Figure12AugustInadditiontodomesticinfrastructureneeds,ChinacontinuestopressaheadwiththeBeltandRoadInitiative(BRI),withChinasigningmemorandaofunderstandingwithPortugal(December2018)andmorerecentlyItaly(March2019),coveringinfrastructureinvestmentsintheircountries.Wemustnotethatoverallinvestmentestimatesvarywidelyfrom$1tn(CentreforStrategicandInternationalStudies,CSIS)to$4tn(PwC);anduncertaintyaroundthetradewarandpoliticalissuesaroundChinesefinancing(e.g.,Malaysia)arelikelytoplayamajorroleinthescaleoftheBRIinthecomingyears.■Mexico:MexicanPresidentAndrésManuelLopezObradorranonaticketofincreasinginfrastructurespendingasaformofeconomicstimulus,pledgingtoincreasegrossfixedinvestmentto25%ofGDP(from20%currently).HishaltingofconstructiononthenewMexicoCityairport(NuevoAeropuertoInternacionaldelaCiudaddeMéxico),whichreceivedsignificantattentionowingtotheinvolvementofinternationaldebtholders,wasdrivenbysociopoliticalconcernsregardingtheimpactoftheprojectandtiestothepreviousadministration,andthuswebelievedoesnotcontradictthispro-infrastructureBrazil:Brazil’spoorqualityofinfrastructure,notonlywithinLatAmbutalsoglobally,ledtothecreationoftheInvestmentPartnershipsProgram(IPP)in2016,coordinatingprojects,deliveringconcessions,andprivatizingassetsinordertoboostinfrastructurequality.Inthethreeyearssince,193projectsqualifiedfortheprogramme,translatingtoanestimated$68bnininvestmentoverthecomingyears.■Figure12:EMProject AllocationestimatesareblueSource:Refinitiv,CreditSuisse8Infrastructureprojectsummary:Allocation %of SouthKorea1.44 412 Proposalforexpenditure next512 Setasidefrom 23bn PartofBRI NotimelineInvestmentfromAIBand336 governmentplansfor 3.6 Privateand 4 Largestestimatefor No Increaseingrossfixed investmentfrom20%to25%68 Approved 12August5.ResidentialcyclelooksgoodinThemajorityofmortgagesinEuropearefixedandlong-dated;thefurtherfallinbondyieldshaspushedmortgagerateswellbelowrentalyieldsinmostEuropeancountries,meaningitischeapertobuythantorent.Figure13:Inmanycountries,themajorityofmortgagesarefixed-rate… Figure14:…andinmostEuropeancountriestherentalyieldiscomfortablyabovethemortgagerate0GapbetweenrentalyieldandmortgageShareoffixed-rateSource:Refinitiv,CreditSuisseSource:Refinitiv,GlobalPropertyGuide,CreditSuisseThisunderpinshouseprices,andashousepricesrise,sodoeshousingFigure15:Housepricesarerisingnearly House12August5.ResidentialcyclelooksgoodinThemajorityofmortgagesinEuropearefixedandlong-dated;thefurtherfallinbondyieldshaspushedmortgagerateswellbelowrentalyieldsinmostEuropeancountries,meaningitischeapertobuythantorent.Figure13:Inmanycountries,themajorityofmortgagesarefixed-rate… Figure14:…andinmostEuropeancountriestherentalyieldiscomfortablyabovethemortgagerate0GapbetweenrentalyieldandmortgageShareoffixed-rateSource:Refinitiv,CreditSuisseSource:Refinitiv,GlobalPropertyGuide,CreditSuisseThisunderpinshouseprices,andashousepricesrise,sodoeshousingFigure15:Housepricesarerisingnearly Houseprices,100=10yearsFigure16:…ashousepricesrise,buildingactivity Europermits,yoyHouseprices,yoy1999200120032006200820102013Source:Refinitiv,CreditSuisseSource:Refinitiv,CreditSuisse9Euro12AugustIntheUS,thefallinmortgagerateshelpshousingactivityasshownbelowwhichasaproportionofGDPisstillathistoricallylowlevels-at3.8%ofGDPcomparedtoapeakofnearly7%in2007.Figure17:Ifbondyieldsfall,housinggets USexistingFigure18:Housingas%ofGDPis sales,YoY%10yUSTreasury12034USNAHB12AugustIntheUS,thefallinmortgagerateshelpshousingactivityasshownbelowwhichasaproportionofGDPisstillathistoricallylowlevels-at3.8%ofGDPcomparedtoapeakofnearly7%in2007.Figure17:Ifbondyieldsfall,housinggets USexistingFigure18:Housingas%ofGDPis sales,YoY%10yUSTreasury12034USNAHBUSresidentialconstruction(%GDP0Source:Refinitiv,CreditSuisseSource:Refinitiv,CreditSuisseTheimpactoffallingbondyieldsonm