Equity

Investment Insights by our experts and thought leaders

Japan Equity Monthly - December 2020

We look into the potential economic impact of Japan’s attempt to become carbon neutral. We also analyse why Japan’s fiscal condition draws little attention although the country is on course to spend a record amount in its upcoming budget.

2021 Global Equity Outlook

We continue to spend the vast majority of our time on company research and there are doubtless other observers better placed to predict which path that the market will go down, but it seems more likely to us that the future will look much like the pre-COVID-19 recent past. For instance, central banks have become increasingly politicised in recent years. At the same time, many national governments are more indebted than ever, having rushed through huge wage support programmes—designed to postpone a severe economic reckoning as a result of the lockdowns that they imposed.

2021 Japan Equity Outlook

We believe 2021 will be remembered as a year that marked the beginning of the end of the COVID-19 crisis as the world develops vaccines to counter the pandemic. In Japan, we expect a gradual recovery of its economy in 2021, as the pandemic’s impact lessens, and economic activity normalises.

2021 Singapore Equity Outlook

Following the negative performance of 2020, we believe 2021 could see better returns and a recovery for Singapore equities. We believe equity returns will remain supported by the re-opening of the Singapore economy and expect an improved market performance in 2021. With the backdrop of fewer global trade conflicts, accelerating exports, accommodative policy, higher return on equity and low foreign ownership, we expect the outlook for 2021 earnings to improve and that should support better market returns.

2021 China Equity Outlook

Despite the pandemic, markets in China were resilient and we believe that they will continue to reach new highs in 2021. Structural factors that drove the Chinese markets in 2019 and 2020 remain intact and strong leadership enabled the Chinese markets to be among the best performing (if not the best performing) markets in the world. In addition to the structural factors that we have highlighted repeatedly over the past few years, such as import substitution trends, high value-added manufacturing and deep penetration and consumption of e-commerce, new structural factors have started to emerge that stoke our optimism towards the Chinese markets.

2021 Asian Equity Outlook

Asian countries have, by and large, handled the COVID-19 pandemic better than their western counterparts and are now emerging from that nadir. Most of these countries have plenty of fiscal and/or monetary stimulus headroom. And this superior growth and better national finances are available at a significant discount to developed markets. A languid US dollar will enhance local currency returns in these “risk assets”.

Beyond the pandemic: Identifying sources of alpha in Japan

The global markets surged in 2020 despite the COVID-19 pandemic. While we expect the liquidity-driven rise to continue for a while, we should be prepared for the tide to eventually turn. We identify Japanese industries, notably “Delta ESG” stocks, that could become sources of alpha in the post-pandemic world.

Future Quality Insights - December 2020

Another quarter goes by and we are still (in the United Kingdom anyway) limited in our ability to travel and congregate in offices. In my spare time, I often end up searching vainly for fresh and interesting new content, only to revert to watching stalwarts such as the Bourne film series.

Global Investment Committee Outlook: Especially buoyant non-US equities

Although some on the committee agreed with the market consensus for a moderate continuation of economic growth and equity markets, and a few were even more cautious, especially regarding increased fears of inflation later in 2021, the majority agreed with a more positive scenario in which the global economy outperforms market consensus, while equities, especially those outside of the US, rally sharply.

Asian equity monthly – November 2020

Asian stocks turned in strong gains in November, boosted by positive COVID-19 vaccine developments, rising hopes for better US-Asia ties under the leadership of US President-elect Joe Biden and stronger-than-expected economic data from several Asian countries. The MSCI AC Asia ex Japan Index rose 8.0% in US dollar (USD) terms over the month.

Australian equity monthly - November 2020

The S&P/ASX 200 Accumulation Index returned 10.2% during the month. Australian equities enjoyed a strong month (in fact, the best monthly return since 1992) on positive COVID-19 vaccine news, additional quantitative easing measures locally and increased certainty regarding the US presidential election result.

Japan Equity Monthly - November 2020

The Japanese equity market has posted impressive gains as 2020 draws to a close, with the Nikkei Stock Average reaching a near three-decade high, and we assess the rise from a long-term perspective. We also analyse how Japanese equities have managed to defy a stronger yen.

Efficiency of Japanese corporate investment in human capital and shareholder value

Japan struggles with an aging and shrinking population and it is important for the country, both from an economic and social perspective, to improve its relatively low labour productivity by efficiently utilising its human resources.

Japan IP beats the US in October

For October, on a seasonally adjusted YoY basis, Japan’s October YoY Industrial Production (IP) result was better than both US Manufacturing IP and US Total IP. It likely surpassed Europe’s too.

Significant value waiting to be unlocked in Japan

The COVID-19 pandemic has triggered changes in Japan that would have taken many years to initiate in less turbulent times. We believe there is significant value to be unlocked under such circumstances.

Asian equity monthly – October 2020

US presidential election jitters and an uptick in COVID-19 cases in the US and Europe triggered a downturn in global equities in October. Asian stocks, however, managed to turn in decent gains for the month, owing to a slowing pace of COVID-19 infections in the region and growing optimism over China’s economic recovery. The MSCI AC Asia ex Japan Index rose 2.8% in US dollar (USD) terms over the month.

What the Biden win could mean for Japanese equities

We assess the US election outcome from the perspective of the Japanese equity market, focusing on the economic and policy changes that are expected to accompany the change in US leadership.

Japan Equity Monthly - October 2020

We discuss the reasons behind the Japanese equity market’s recent outperformance and the factors likely required for the gains to be sustainable in the longer term. We also assess the recent surge by the Mothers Index and key points to watch going forward.

Australian equity monthly - October 2020

The S&P/ASX 200 Accumulation Index returned 1.9% during the month. Australian equities were supported by the release of the Federal Budget early in the month which saw increased spending and tax cuts to aid the economy as it recovers.

Global Equity Quarterly Q3 2020

Last month saw a marked increase in share price volatility in some of the stocks deemed most insulated from the adverse impacts of COVID-19. We suspect that this volatility will persist for some time as the real strengths of economies are revealed; with emergency wage support measures rolling off in the UK, inventories partially rebuilt and political uncertainty elevated.

ESG Insight: Biden’s most critical investment

At the time of writing, Democrat presidential candidate Joe Biden leads the polls by 10 percentage points and will likely be elected President of The United States on 3 November 2020. The potential for a Democrat “Blue Wave” with control of both houses easing the passage of legislation also seems possible.

Adapting to the “new normal”: Japan’s paradox

With the global outbreak of COVID-19 in the first half of 2020, the world was turned upside down. Under such circumstances, Japanese companies are now faced with new challenges to adapt to this “new normal”.

Asian equity monthly – September 2020

After three consecutive months of strong gains, Asian stocks finally succumbed to profit taking in September triggered by concerns that the global recovery from the COVID-19 pandemic could be running out of steam.

Australian equity monthly - September 2020

The S&P/ASX 200 Accumulation Index returned -3.7% during the month. Australian equities lagged most developed markets during the month, as most markets took a breather in September.

Internet healthcare - a reset of healthcare delivery in Asia

The Covid-19 pandemic has accelerated the adoption of internet-based healthcare services. Growing in importance, penetration and acceptance, telemedicine will revolutionise and augment Asia’s healthcare systems.

Japan Equity Monthly - September 2020

Yoshihide Suga, Japan’s new prime minister, is widely expected to retain his predecessor’s fiscal and monetary policies known as “Abenomics”.

SugAbe-nomics

It does not seem that there are enough differences between Abenomics and the proposed economic policies of likely new Prime Minister Suga to justify the completely new portmanteau “Suganomics,” as a few analysts have suggested.