We think Japanese companies are poised for a pickup in capital expenditure, led by productivity enhancing investments.
In a survey conducted by the Nikkei in March 2017, 80% of respondent companies indicated that they were either planning or considering the implementation of productivity enhancing investments.
The ageing world presents significant savings and productivity challenges to this and subsequent generations of investors and workers. Change will no doubt remain a constant, as it has been throughout the last two centuries in particular.
The MSCI Asia ex Japan (AxJ) Index rose by 1.6% in US dollar (USD) terms. Year-to-date (YTD), the index returned 22.8%, outperforming MSCI World by over 12%.
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.
In the Japanese equities market, high dividend strategies have significantly outperformed other strategies. We believe that – in a low growth, low interest rate environment where investors yearn for yield – these strategies will continue to outperform.
The Global Investment Committee remains moderately optimistic about the global economy and equity markets, while being cautious on global bonds.
Following four years of intense consultation and three failed attempts, MSCI has just added China A-Shares into its international indices. We view this as expected and in some ways, long overdue.
MSCI Asia ex Japan (AxJ) gained 4.7% in USD terms, outperforming the MSCI AC World and MSCI Emerging Markets Indices.
“Last night’s release of the first quarter data on aggregate Japanese corporate profits confirms my twelve-year theme about improving corporate governance there and how investors should not worry about the slow domestic economy.”
John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com