“Although Mester and Yellen do not align closely with Trump’s values, they are at least professional central bankers and can likely be relied upon to drive a non-political, non-confrontational but most importantly a safe course for monetary policy and bank regulation.”
The release of the second quarter data on aggregate Japanese corporate profits confirms my twelve-year theme about improving corporate governance in Japan and how investors should not worry about the slow domestic economy.
Our London-based Global Credit Portfolio Manager lays out the scenarios of the upcoming German election and its ramifications for select German credits.
Our equity portfolio manager who specializes in India concludes that reforms should have a very positive effect on that country’s growth.
As China’s economic development enters a more sophisticated and mature phase, it is beginning to challenge many of the status quos that have been taken for granted since the middle of the 20th century.
We identify the fundamentals that have supported Australian housing and the signals that investors should look for to determine if this period of positive appreciation is coming to an end.
“Wall Street seems to have long had a hands-off warning to the Fed, which seems to have been very effective, but does this really deserve to be continued? Can Wall Street effectively regulate against speculative bubbles?”
What is the prognosis for Emerging Markets as major global central banks begin to tighten policy?
The rapid development of the Asia Credit markets provides new opportunities to improve the risk and return profile for investors.
“ECB rhetoric might waver back and forth, but unless there is a global downturn or a major political revolution in Italy, its monetary policy will become less accommodative...”
Our top Japanese Equity staff, including our CIO, report on how Corporate Governance remains on a strong upward trend, which should boost alpha for active managers and beta for the overall market via improvements in ROE and shareholder distributions.
The Global Investment Committee remains moderately optimistic about the global economy and equity markets, while being cautious on global bonds.
Theresa May’s Conservative Party lost its outright majority in last Thursday’s general election. What are the implications for Brexit and the markets?
“Could it be possible that Trump would accept an all-white male Fed Board?”
“Many people are claiming that President Trump’s aggressive trade rhetoric during the campaign has been permanently overridden by the realities of the presidency.”
While highly unlikely, we examine the potential impact on Japan of a major crisis on the Korean Peninsula.
“Japan's example should always provide a guide to investors to be wary of arguments that surges in risk assets to high valuations based upon huge monetary and fiscal policy stimuli, coupled with excessive confidence, even if long-lasting, are acceptable.”
We believe that Abenomics is working, however we feel that its success cannot be determined by viewing government policy frameworks in isolation.
“Any major crisis in the Northeast Asian region, especially one involving a crisis within Japan’s borders, is likely to be handled very aggressively by the Bank of Japan (BOJ), with it bending the rule-book as much as the Fed did during the Global Financial Crisis or as the ECB has done in the past five years.”
Our team of our Portfolio Managers in London, one of whom hails from France, reviews the prospects and ramifications of this weekend's French election.
Our Tokyo Fixed Income team explains its view on the Japanese labor market and its effect on consumer inflation and Bank of Japan policy.
During the 2016 December quarter, we witnessed the value style stage a partial recovery after having underperformed for at least two years or so. Is this as good as it gets? Or will value continue to outperform after its initial recovery, after having being in the wilderness for some time?
China started 2017 with real momentum, following the property driven debt-fuelled stimulus of last year, and the blue skies a result of Government directives to curb pollution during March’s Central Government meetings. However, with an expectation of lower steel intensity sectors driving growth this year, what will this mean for Australia’s resource sector?
As commodity prices have risen, the Australian economy is set to benefit from these continuing gains.
China has had a significant impact on the supply side in two key global commodities during 2016. Going forward, look out for further actions from China on the supply side of commodities.
Given the release of the fourth quarter data, we update our decade-long theme about improving corporate governance in Japan.
There has been much concern lately about the new US administration’s trade policy. Taking a step back and looking at global trade numbers, we can draw a number of conclusions that might explain America’s new thinking on trade.
Asia’s Credit market has come a long way since the Asian Financial Crisis of 1998, having evolved into a large, deep and liquid market.
Given the challenges, why bother?
Our head of Global Strategy in New York analyzes and forecasts the developments of major topics arising from the new Administration.
In-depth report: Economic growth in Asia is expected to remain broadly stable in 2017. While there will be greater external uncertainties as well as country-specific challenges, Asian economies are, on balance, better equipped to deal with external pressures compared to a few years back.
Our Senior Portfolio Manager for Emerging Market Debt in London forecasts that in 2017, this asset class could well match 2016’s achievement.
Why Asia Credit should stand alone from Global Emerging Market Debt.
As we start 2017, we expect the continued recovery in Japan’s economy will be driven by three factors outlined in this article.
Trump certainly is non-conventional, in many ways similar to Teddy Roosevelt. Hopefully, Japan can adapt to this new reality, and instead of blocking Trump's initiatives, be able to have acceptable compromise “deals” ready.
Nikko AM's Global Investment Committee's 2017 Outlook — More Economic and Equity Reflation, Despite Less Dovish Central Banks
We believe that in an increasingly uncertain world, Japan’s less uncertain market will provide a compelling opportunity for serious investors.
The phrase “lower for longer” could well become unfashionable very quickly after years of central banks combating the forces of deflation and wishing for inflation instead.
Our China Fixed Income expert in Singapore expounds upon how the Trump election is forcing China into taking specific economic policies.
A combination of key regional factors—including demographics, urbanization and existing infrastructure gaps—all point to sustainable growth for healthcare in Asia ex Japan.
Following the US election, we have seen bond rates continuing to increase, a stronger US dollar, firmer commodity prices, and a US stock market at all-time highs. Is optimism around the US President-elect’s fiscal expansion masking the true deflationary picture?
We expect Italian assets to underperform until it becomes clear who will be able to form and lead a new government. Nevertheless the outcome of the referendum was already priced into financial markets.
Given the release of the third quarter data, we update our decade-long theme about improving corporate governance in Japan.
Following Trump’s election, our Emerging Market team in London, supported by John Vail, our Global Chief Strategist, discuss what, at this early stage, we can potentially expect to see from the US regarding its relationship with Emerging Market economies.
Our oil experts in the US and London analyze the Saudi oil conundrum.
Our Senior Portfolio Manager for Asian equities reflects on Asian markets in the wake of Trump’s Triumph.
Neither Brexit nor Trump’s win was an accident – ‘the people’, in particular the working and middle classes, are purposefully and deliberately giving the political elites a thump on the nose.
Much like the BREXIT result, Americans surprised the consensus with an anti-establishment vote.
Our Senior Portfolio Manager for ASEAN equities reviews the trend towards Strongman rule in ASEAN.
Our Multi-Asset portfolio manager based in Singapore reviews the prospects for profit margin expansion in the three main Emerging Market regions.
Our UK expert on BREXIT and our chief global strategist respond to Japan’s concern about its investments in the UK.
The prevailing market view on the region remains negative, mainly centring on China's debt problem and general doubts about Abenomics. We focus on some aspects of this negativity from a sovereign balance sheet perspective and conclude that the potential dangers are overstated.
Oil production in Nigeria has been severely hampered in recent months as local militant group, the Niger Delta Avengers, have committed numerous attacks on oil pipelines in the region, materially lowering the country’s oil production. Our Emerging Market (EM) debt team in London take a closer look the political situation in Nigeria, the origins of the conflict, prospects for its potential resolution and its impact on global oil prices.
Given the release of the second quarter data, we update our decade-long theme about improving corporate governance in Japan.
Japan is a consensus-driven culture and improved corporate governance is now the consensus. There are clear signs that many companies are moving towards more shareholder-oriented management.
The CEO of our Indian joint venture and our senior EM portfolio manager in London analyze the great importance of recent legislative developments in India.
Our expert on Asian financials describes the exciting technological developments that will change the way we all do business in the future.
Our expert on Turkey details his cautious stance on Turkey's near-term future.
Our Chief Strategist in Japan shares his views on political landscape and the economy.
Following our analysis of the recent UK vote, our Emerging Market debt team in London discusses Brexit's potential ramifications for this asset class.
Many are wondering if it's time to give up on Abenomics. While some of the scepticism is understandable, we believe it is too early to throw in the towel.
Two of our senior portfolio managers in London update their earlier pieces on what lies ahead for what should be a long-drawn out BREXIT path.
Nikko Asset Management's Global Investment Committee’s post-BREXIT scenario, including market and economic targets, is on the moderately gloomy side.
Uncertainty after Brexit vote, but the correction in valuations and market volatility could provide buying opportunities in some fundamentally strong credits.
Although it is still too early to determine the full implications of Brexit over the longer term, in the short term, we can expect significant market volatility as uncertainty prevails, but this does not mean that investors should panic.
Two of our senior portfolio managers in London update their earlier piece on BREXIT with numerous points of great interest on this crucial topic.
Our oil experts in London and New York update their bullish views in January with new facts, while retaining their positive intermediate-term view on oil prices.
Our global rates and currencies strategist in Australia lays out his dovish Fed scenario as an alternative to our house view. In it, he expects the Fed to wait until September or later to raise rates, and states his case that the Fed’s actions do not affect US bond yields.
Our London-based portfolio manager, Simon Down, and his colleagues review the refugee crisis that is turning European politics into a "hornets' nest."
Our two leading Global Emerging Market debt experts, both based in London, weigh the possibilities of a sustained upturn in this long-suffering asset class.
Our Chief Global Strategist explains the reasons why there is too much unjustified pessimism about Abenomics.
Our Asian currency expert discusses the potential ramifications of the increasing CNY-orientation for Asian currencies.
For the next 12 months, we are quite positive on performance prospect for global credit, singling out five investment themes.
Since 2011, Brazilian assets have re-priced to the downside. Given the size of the adjustment – both in commodities and assets – the question is whether Brazil is now presenting attractive investment opportunities.
Nikko Asset Management's Global Investment Committee met on March 29th and updated our intermediate-term house view on the global economic backdrop, central bank policies, financial markets and investment strategy advice.
We expect June and December Fed hikes, but only mild further easing ahead for the BOJ and ECB. Meanwhile, we expect oil prices to creep higher through 2016 despite the stronger USD due to relatively firm economic developments in China and the G-3.
We expect that global equity and bond investing will be positive for Yen based investors due to Yen weakness, but for USD based investors, we are taking only a neutral stance on global equities due to a cautious forecast for US equities, whereas we are positive on Asia-Pac ex Japan, Japan and Europe. Meanwhile, we are moderately negative on bonds in each region when measured in USD terms, so we underweight them.
Our Singapore-based Fixed Income Portfolio Manager details the reasons for ASEAN’s recent rebound and why such should continue.
Although the current polls do not indicate a clear majority outcome, in this piece we will examine some of the issues that may cause sentiment to shift towards a Brexit, and what the UK leaving the European Union might mean for the UK and EU economies post breakup.
While a recession in the US is not our base scenario, the impact of such an event on credit exposure is worthy of consideration. In our historical analysis we've found that the driver of past recessions can provide important insight into which credit maturities are most attractive.
Our global strategist sheds light on how corporate profit margins are reflecting the continuing improvement of corporate governance in Japan.
Our Global Credit staff in London detail their rationale behind concentrating on service sector exposure globally.
Our global equities team in Edinburgh explains their views on the prospects for their asset class.
As we have seen over the past year in the equity market, the more Beijing wants to exert control, the more it slips away. Is pragmatism going to trump ideology in Beijing? In the current environment, the PBOC letting the RMB free float might not be so unbelievable after all.
In our view, the USD will soften when the Fed comes to accept the reality of slow-to-no growth globally and becomes more dovish in its language and approach.
Our London and US analysts review oil prices from the supply and demand angle and they note that global demand growth remains high while global supply is narrowing, indicating that oilfs price swoon could be over.
Our Chief Global Strategist regards Japan positively in the global-macro context and predicts that Japanese equities will outperform global equities in the first half of 2016.
Our Singapore fixed income team expounds on the outlook for this clearly globally important factor.
There are many concerns about Abenomics losing its power to reform the economy, but our Chief Strategist in Japan, Naoki Kamiyama, shows that the major developments in tax reform prove that Abenomics is alive and well.
James Eginton provides his insights on the economic transition in China following a recent research trip to the region. The transition from a reliance on infrastructure investment to consumer spending - perhaps the largest the world will ever see - has significant implications for global growth.
John Vail reflects on the Fed decision and the path forward. The Fed was even more dovish than apparent in the headlines.
Nikko Asset Management's Global Investment Committee met on December 8th and updated our intermediate-term house view on the global economic backdrop, central bank policies, financial markets and investment strategy advice.
We only expect mild further easing ahead, especially as the ECB does not wish to cause a rupture while the Fed is hiking rates.
We forecast that Asia Pac ex Japan, Japan and Europe will outperform in the next six months, while the US should underperform and, thus, deserve an underweight stance vs. all other regions.
Our investment management teams have again come together to update their views given new developments in India.
The IMF's decision to include the Renminbi into the SDR is a major push for the RMB to become one of the world's major reserve currencies.
Our lead Australian fixed income portfolio manager discusses her intermediate-term outlook for the bond market “down under.”
Developed and emerging markets in Asia ex-Japan have clearly been under tremendous pressure in recent months, including redemptions of more than USD 50bn from the region in September, the heaviest ever witnessed.
We update our views on whether ECB QE has had a positive effect on corporate earnings.