We believe that Abenomics is working, however we feel that its success cannot be determined by viewing government policy frameworks in isolation.
Steve Williams, the Portfolio Manager responsible for Green Bonds in Nikko AM’s London office, examines how this burgeoning asset class is likely to develop into a mainstream part of global fixed income portfolios.
“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.”
John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com
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.
“We all have heard of the term 'interest rate repression' for how central banks have kept rates at ultra-low levels, but this has only been successfully maintained due to what I call 'inflation repression.'”
John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com
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.
Is Volatility too low and what re-pricing could mean for various asset markets
The Global Investment Committee remains optimistic about global economy and equity markets despite their recent strong equity rallies and increased political risks.
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.
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.
Our Senior Portfolio Manager in New York, who specializes in natural resource equity funds, explains the outlook for oil prices.
Our head of Global Strategy in New York analyzes and forecasts the developments of major topics arising from the new Administration.
Global economic, credit and interest rate cycles are becoming desynchronised. In this paper, we introduce Nikko AM’s first generation default probability model for corporates.
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.
2016 may best be remembered as the year in which Trump won and the world changed. The question becomes which reforms will take centre stage.
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.
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.
If the deal is adhered to then it is significant and will see the global oil market fall into under supply through 2017.
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.
Advances in science and technology are continuously changing and progressing the medical profession and broader healthcare industry. While the industry growth will be strong, not all participants will fare equally.
Our Multi-Asset portfolio manager based in Singapore reviews the prospects for profit margin expansion in the three main Emerging Market regions.
Emerging markets (EM) have endured strong adjustments in commodities and currencies that coupled with reforms makes a good case for better growth ahead.
It has continued to be a wild roller-coaster ride for investors, and unfortunately, it is not likely to be very calm for the foreseeable future. Investors must keep a keen eye on geopolitical risk and be ready to act if such appear to accelerate into a situation that could significantly impact markets.
No turning back — 2% inflation target not only intact but enhanced with a new “inflation overshooting commitment”
Although it is tempting to join the ‘peak demand’ bandwagon, as investors it is important to understand the impact that different technologies (and their timing) have on energy prices.
Our UK expert on BREXIT and our chief global strategist respond to Japan’s concern about its investments in the UK.
QE policies have had a material impact on bond yields and valuations. We believe that the evolution of these policies will be more important than fundamentals in indicating when bonds can break the cycle of ever-declining yields.
Given how important central bank policies are for the pricing of assets, our focus has to be on what they do next. If debt monetisation were to occur, it would have significant implications for equity investing.
In our view, electric vehicles will have significant implications (both positive and negative) for many sectors, particularly automotive and oil, presenting investors with interesting opportunities, particularly in Asia.
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.
Many market commentators have been speculating that we are finally coming to the end of the bond rally that has endured for the past 35 years. It's worth noting that this is nothing new—we have heard similar suggestions many times before over recent years.
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.
Emerging Market reforms won't stop or pause with the current market recovery.
Following our analysis of the recent UK vote, our Emerging Market debt team in London discusses Brexit's potential ramifications for this asset class.
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.
We believe it is time to reassess market attitudes towards liquidity. We may have to start moving towards a model where investment horizons and liquidity expectations are more appropriately matched to the asset classes being invested in.
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.
What is more important for credit spreads in the current environment: the fundamentals or central bank actions? Our research suggests that since 2010 the answer has been central banks and, in particular, the US Federal Reserve.
The global advertising industry is undergoing a rapid transition. Advertisers are currently under-allocating to mobile advertising, and there are some companies that are well placed to take advantage of this trend.
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.
US monetary policy grows less independent as 2016 unfolds and risks to global growth abound in a rebalancing China, a deflationary struggle in Europe and whispers of a Brexit.
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.
This policy change by the BOJ is a positive in terms of maintaining and strengthening the inflation expectations that have begun to flower.
Unfortunately for the soundness of the sleep among BOJ-watchers, Mr. Kuroda believes that surprising the market is the best way to achieve his intended result.
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 Singapore Multi-Asset and Equity team analysts cover oil’s swoon using a bit of humor, but the clear-cut conclusion is of great importance.
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 Chief Investment Officer in Japan details the many reasons for optimism on Japanese equities in 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.
Looking forward, even though inventories were revised higher, their long depletion means they remain far too low in my view, and should continue start to rise significantly in the quarters and years ahead.
As we enter 2016, we believe the divergent monetary policy theme will continue -- with the major risk to global bond markets and Fed rate rises continuing to be Europe.
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.”
Once again, as has long been our view, disappointing macro-data should not worry investors in Japanese risk assets very much at all.