In line with our market outlook going into 2017, we previously observed the prospect of attractive opportunities emerging during the year. This was expected to be driven by a rebound in earnings growth, attractive valuations and accommodative policy conditions.
Asia ex-Japan (AxJ) equities returned -2.0% in US Dollar (USD) terms, underperforming MSCI World and MSCI Emerging Markets (EM). Currencies across AxJ generally weakened against the dollar following the Federal Reserve's (Fed’s) decision to hike rates. Meanwhile, Gold declined 2.2% while oil jumped 8.66% month-on-month.
Global Equity - Asia ex-Japan Equity - Japan equity
This PDF is a compilation of 2017 market outlook reports by three of our equity teams.
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.
The cumulative positioning of investors in companies and asset classes that are deemed safe in a “lower for longer” environment is undergoing a significant test at present.
Asia ex-Japan equities returned -2.9% in US Dollar (USD) terms, underperforming MSCI World. US president-elect Donald Trump's stance on the repeal of the Trans-Pacific Partnership and a domestic US focus at the expense of foreign trade has initially been perceived as negative for Asia, although there remains much uncertainty with regard to US policy going forward.
Asia ex-Japan equities returned -1.5% in US Dollar (USD) terms, outperforming the MSCI World which declined by 1.9%. Crude oil prices finished the month down as OPEC members failed to reach a conclusive deal on supply, while political developments in US and ASEAN were key drivers of markets during the month.
Singapore's weak 3Q2016 GDP report and MAS's 'unchanged' policy guidance on the SGD paint a sombre outlook for the Singapore economy for the rest of 2016 and 2017. We believe this provides good insight on the equity strategy going forward and reaffirms our strong bias away from the domestic economy and towards a focus on the alpha and restructuring opportunities in New Singapore.
"Find growth and you will find performance" was our Asian Equity investment mantra in early 2016 as the world grappled with slowing growth and lethargy with monetary experimentaton in low and depressed interest rates.
Asia ex-Japan equities rose in September, returning 1.6% in US Dollar (USD) terms and outperforming both the MSCI World and MSCI Emerging Markets indices. Risk appetite remained healthy following the US Federal Reserve’s decision to leave interest rates unchanged and a more favourable US presidential debate outcome.
Asian markets extended their rally into August. Asian stocks were supported by a robust reporting season where earnings were mostly in line with consensus expectations.
We continue to see good value in Asia ex-Japan equities for long-term investors. Asia still has considerable room at both the monetary and fiscal levels to stimulate economies if needed and governments appear willing to act on reforms and infrastructure investment.
We continue to see good value in Asia Pacific ex-Japan equities for long-term investors. We continue to advocate that Asia is ultimately a net beneficiary of lower-for-longer commodity prices and offers significant growth opportunities led by infrastructure development, albeit contingent on positive government action.
Asia ex Japan equities declined by 1.3% in USD terms in May, largely on the back of currency weakness.
Asia ex Japan edged lower in April, most currencies depreciated against the USD.
Asia ex Japan equities rebounded in March, with the MSCI Asia ex Japan index returning 11.2% in USD terms.
The MSCI Asia ex Japan index fell by 0.9% in USD terms. Among Asian markets, ASEAN outperformed, aided largely by Indonesia and Thailand.
Investors returned from their Christmas and New Year's breaks with renewed concerns over the health of the global economy.
Corporate earnings growth in Japan is clearly on a different path than in other regions. A 15-year deflationary environment has forced many publicly listed companies to dramatically overhaul their cost and revenue structures.