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Investment Insights by our experts and thought leaders

Japan's Election: Abe's Continued Focus on the Economy

Our Chief Strategist in Japan shares his views on political landscape and the economy.

What does Brexit mean for Emerging Markets?

Following our analysis of the recent UK vote, our Emerging Market debt team in London discusses Brexit's potential ramifications for this asset class.

Abenomics hasn't failed yet, but it does face global headwinds

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.

BREXIT, BREXIT! Where’s The Exit?

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.

Slowdown but No Global Recession, with EU Cohesion, but Struggling UK

Nikko Asset Management's Global Investment Committee’s post-BREXIT scenario, including market and economic targets, is on the moderately gloomy side.

Brexit: Outlook for Global Fixed Income & Credit

Uncertainty after Brexit vote, but the correction in valuations and market volatility could provide buying opportunities in some fundamentally strong credits.

Brexit: Where to now for markets?

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.

Brexit: In or Out? The Final Run In.

Two of our senior portfolio managers in London update their earlier piece on BREXIT with numerous points of great interest on this crucial topic.

Global Oil Update: Continuing positive outlook or flash in the pan?

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.

Fed rate rise most likely in September, but could be delayed until 2017

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.

EU Refugee Crisis: European Weak Points and Outlook

Our London-based portfolio manager, Simon Down, and his colleagues review the refugee crisis that is turning European politics into a "hornets' nest."

Emerging Markets: Are we there yet?

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.

Abenomics is Alive and Well

Our Chief Global Strategist explains the reasons why there is too much unjustified pessimism about Abenomics.

The Subtle Shift in Asian Currencies from the Dollar to the Renminbi

Our Asian currency expert discusses the potential ramifications of the increasing CNY-orientation for Asian currencies.

Global Credit Outlook

For the next 12 months, we are quite positive on performance prospect for global credit, singling out five investment themes.

Is Now the Time to Invest in Brazil?

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.

G-3 and Chinese Economies Moderately Firmer in 2016

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.

Fed in June and December, but ECB or BOJ Slight Easing

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.

ASEAN: Reversal of Fortunes?

Our Singapore-based Fixed Income Portfolio Manager details the reasons for ASEAN’s recent rebound and why such should continue.

Scones or Croissants? Brexit: The Route to Exit and Key Risks

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.

Is it time to get back into credit?

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.

Japan's "Show Me the Money" Corporate Governance - March 2016

Our global strategist sheds light on how corporate profit margins are reflecting the continuing improvement of corporate governance in Japan.

Our Global Credit Strategy: Seeking Services

Our Global Credit staff in London detail their rationale behind concentrating on service sector exposure globally.

Global equities: Structural re-pricing occurring or just volatility?

Our global equities team in Edinburgh explains their views on the prospects for their asset class.

Renminbi: A one-off devaluation or free float in 2016?

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.

It's All About the Dollar

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.

Is Saudi Arabia Finally Winning the Global Oil War?

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 oilfs price swoon could be over.

The Japanese Equity Outlook After the Nasty New Year Start

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.

What is the Outlook for the Yuan?

Our Singapore fixed income team expounds on the outlook for this clearly globally important factor.

Abenomics Shows Power through Tax Reform

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.

China: Lost in transition?

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.

The Fed was even more Dovish than Apparent in the Headlines

John Vail reflects on the Fed decision and the path forward. The Fed was even more dovish than apparent in the headlines.

US & China Economies Sturdy in 2016; So-So for EZ and Japan

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.

Fed Normalization, but not ECB or BOJ

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.

India: Modi Mania

Our investment management teams have again come together to update their views given new developments in India.

What's to come? - China's RMB as a global reserve currency

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.

Australia: Lower GDP growth and CPI should mean lower 10-year bond yields

Our lead Australian fixed income portfolio manager discusses her intermediate-term outlook for the bond market “down under.”

Asia ex-Japan Equities - Historic Price to Book Valuation buying opportunity emerges

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.

Did ECB QE Jump-start Eurozone Earnings Like the US Experience?

We update our views on whether ECB QE has had a positive effect on corporate earnings.

What Investment Themes Will Drive Credit Markets?

What Investment Themes Will Drive Credit Markets?

A better supply/demand balance in Europe, outperformance of “high yield“ globally, positive event-risk in the telecom sector and opportunities in local currencies, as well as other credit related investment themes, all present interesting opportunities for generating positive returns, even in a challenging environment.

Sifting Through The Ruble: Global Commodity Currencies

Our Nikko Asset Management fixed income experts, led by Simon Down, discuss the prospects for commodity currencies.

Valuation in a Post-QE World

Markets and economies are still being dictated to by unprecedented levels of monetary stimulus. We believe in building a portfolio of companies that are more likely to flourish in the growth environment beyond 2015.

Japan's "Show Me the Money" Corporate Governance - September 2015

We explain how Abenomics is the "icing on the cake" of corporate governance improvement over the last decade.

Zooming in on the Pacific Decade: China's Devaluation

A concentrated, stock-picking approach is the best way to serve a long-term investor's goal of capital appreciation

US rate rises unlikely to have significant impact on 10-year Treasuries

Even though the current term premium on US Treasuries seems too low, it is unlikely to rise significantly unless offshore bond yields start to rise.

Capitalising on the Pacific Decade: Taking the long-term view on China

For investors outside China, whether they have holdings in Chinese shares or not, coming to a coherent investment view on the country has become imperative as it exerts an ever-increasing influence on global markets.

Why did China devalue the renminbi?

While RMB weakness will likely persist for a few months, we don't expect the currency to devalue more than 10% versus USD and we maintain our confidence that the currency will be included into the IMF SDR basket in a year from now.

India: Our Debate on Key Issues

India is a key market to watch in the coming years. Our expert on India, Andrew Holland, CEO of Nikko AM's joint venture there, discusses with Simon Down of our UK fixed income team the forecast for reforms in the country, with some surprising conclusions.

Iron Ore: Supply has arrived but where is the demand?

What lies ahead for iron ore prices, particularly with the Chinese economy slowing and undergoing a transition away from a materials-intensive economy to a consumption-driven economy?

Greece: the Potential Victory from this Defeat

Like many countries that have previously refused to reform at all levels, sometimes it takes a true crisis to change.

Views on the China equity market selloff – from an Asian Fixed Income perspective

The sharp equity market correction in recent weeks after a very strong run over the past year will not have a crisis-level impact to the broader economy.

China: Now and tomorrow

Nikko AM Asia views the recent corrections in Chinese equities, particularly in the onshore markets, as healthy given the sharp increases in value that had occurred due to a frenzied retail market intoxicated by relatively cheap margin financing.

Will US rate hikes weigh on risk assets?

Real yields and inflation expectations currently suggest exceptionally low growth and low inflation far out into the future.

Does the price action of bunds signal an end to ultra low rates?

We do not expect the recent steepening of the bund yield curve to be the beginning of a sustained new trend. Moreover, Eurozone and German economic data, albeit improving, are not sufficient to support the higher bund yields on a sustained basis.

Did Asia's Central Banks Engage in the Global Currency War?

Since the Fed starting hinting at the normalization of interest rates a year ago, Asian central banks' foreign reserve accumulations - except for India and Hong Kong - have either incurred substantial losses or remained flat.

China's LGFV debt swap – Shining light on the Shadows

The importance of President Xi Jinping's strong leadership cannot be stressed enough. Under him China is undergoing dramatic changes. While the most thorough cleansing of state corruption is ongoing, elements of China's grand strategy are becoming more evident both domestically and on the global stage.

Our View on the Crucial Chinese Property Market

Given the significant proportion of real estate investment as a percentage of GDP, as well as the proportion of local government revenue generated from land sales, the property market remains a crucial driver of the Chinese economy.

US Federal Reserve faces headwinds as it starts to raise rates

Interest rate and foreign exchange volatility has begun to increase as the market anticipates the time when the US Federal Reserve will start to reduce monetary accommodation and raise interest rates.

G-3 Economies Should Rebound Nicely

In sum, there certainly are some worrisome issues, as always, but we find none of them convincing enough to prevent moderate increases in equity prices.

China's Outlook and now Positive on Emerging Markets

Much as we expected, China's economy has continued to slow faster than consensus, but does not appear to be in a hard landing.

Central Bank, Inflation, Currency, Commodity and Bond Forecasts

Central Banks: Despite firm economic growth, we believe that a negative YoY CPI through September will steady the Fed's hand.

Regional Equity and Asset Class Forecasts

Coupled with our expectation for global bond yields to rise moderately, we maintain our overweight view on global equities vs. bonds.

European Property: Does it Signal Global Deflation?

Through 2014, one of the largest asset classes in the world was virtually unnoticed as an indicator that Europe is not pushing the global economy into widespread deflation.

Will European QE deliver on Earnings expectations?

There are several credible reasons to expect that QE will boost corporate earnings in Europe, though by not as much as in the US. However the risk of disappointment relative to inflated expectations remains high.

Will deflation or inflation be the global focus for 2015?

In 2015, markets will be looking for any pick up in European and Japanese inflation as a result of their QE programmes. With growth picking up, we may start to see signs of a rise in US inflation.

Australia: Japanese and European QE likely to subdue bond yields and increase currency market tensions in 2015

The key theme of the past few years has been quantitative easing. Although the US has come to the end of its version of this experiment, QE programmes have begun or are about to begin in Japan and Europe.

What will happen to US Treasuries if Japanese government bond yields go to zero?

In a pre-GFC and pre-QE world, zero or negative interest rates on a German, Japanese or US 10-year bond would have been considered highly implausible. However...

Preparing for the Next Phase of Global Evolution: More People and Bigger Cities

We expect the next phase of the global evolution to be driven by a growing global population, rapid urbanisation and for most of it to happen in emerging markets with increasing focus on "green" development.

Implications of the ECB's quantitative easing program for interest rates and currencies

ECB's QE: The major question is, will this program work given the European model of debt creation is via the banking system and not the bond markets?

Steel and Iron Ore Deflation to Continue

The steel industry and its underlying iron ore industry are witnessing excess production and deflationary forces that are similar to the global energy markets.

ECB Success but with Caveats

The QE announcement was a major step forward for Eurozone. It is not without dangers and questions about implementation, however, so markets should not get over-enthusiastic about it.

Will China Provide Global Liquidity Soon?

As the Fed continues to unwind its stimulus, even amidst threats of global deflation, there are hopes that China will accelerate the liberalization of its capital account and take over the Fed's role as the global supplier of liquidity.

NZ market insights - Farmgate Milk Price Update

Supply-side shocks and market distortions have created a degree of uncertainty over the short to medium-term outlook for the New Zealand dairy industry.

Is Brazil in Crisis?

Brazil can no longer continue as “business as usual” and it is at an important crossroads as to whether it can exit the well-known “middle income country trap.” Domestic issues aside, EMs will continue to encounter major headwinds as an asset class in early 2015 due to negative stories from large countries, such as Brazil and Russia.

Our Regional Equity and Asset Class Forecasts

The investment world is changing quickly and 2015 should prove to be a very interesting year, but we see no reason to change our long-held positive view on global equities.

China's Re-stimulation and Emerging Market Divergence

China's economy likely slowed much more than the official statistics show; otherwise, the government would not have reversed course on its various crackdowns, especially on the property market.

G-3 Economies Should Surprise in 2015

Our Global Investment Committee always seems to meet in the middle of great volatility, and this time was no exception, with the investment world facing all sorts of new challenges.

Capitalising on the 'Pacific Decade'

Capitalising on the 'Pacific Decade'

The Asia-Pacific region is evolving and reforming rapidly, both in terms of developing and developed countries. Over the course of the next 10 years, Asia-Pacific, including Japan, will become a default allocation in investor portfolios.

Identifying the key themes for tomorrow's Asia

Asia is evolving rapidly, which has implications for investors globally. It should no longer be viewed as just a cheap manufacturing hub, but a region with high value-added industries catering to an increasingly wealthy middle class.

Rate cuts down under?

If the RBA does cut interest rates, it is likely that they will make more than one cut, so we could see Australia's official cash rate at 2.00% by the second quarter of 2015.

Revisiting the age-old debate on value vs growth investing

Revisiting the age-old debate on value vs growth investing

Many empirical studies have shown that a value style approach to investing in Australian shares has consistently outperformed growth investing - and with less risk.

Green Bonds Go Mainstream

2014 has become a landmark year for green bonds, having become one of the few sustainable investment instruments to reach a suitable scale and poised to enter the mainstream for global institutional investors.

Changing of the guards in Asia

Is political democracy good for economic growth and ultimately, stock markets in Asia? Indisputably, sound political systems are crucial for economic development and progress.

Australian Fixed Income: Credit Commentary - October 2014

Physical credit spreads have remained at reasonably tight levels due to the ongoing search for yield — although global uncertainty in the Middle East, fears about Ebola, and re-emerging concerns about Europe have generated negative sentiment.

Australian Fixed Income: Market Commentary - October 2014

The Australian economy seems to be struggling to achieve traction as the mining boom transitions from a capital expenditure phase to a shipment phase.

Australian Equity: Market Commentary - September 2014

A confluence of factors worked against the Australian market during the month. Regulatory concerns in the banking sector, lower commodity prices and a weaker Australian dollar were the key drivers of the market’s underperformance.

China Worries Continue

Much as we expected, China’s economy has continued to slow faster than consensus, but does not appear to be in a hard landing.

Australian Fixed Income: Credit Commentary - September 2014

In the Australian credit market, the relative lack of supply compared with demand continues to cause spreads to tighten in the physical market offsetting the risks of an unstable geopolitical environment.

Australian Fixed Income: Market Commentary - September 2014

Reasons for the recent weakness in the AUD include a fall in the iron ore price, the rally in the US dollar, weaker Chinese data, and indications that the Reserve Bank of Australia is considering macroprudential controls.

Australian Fixed Income: Credit Commentary - August 2014

Credit spreads generally continued to tighten in August, although Australian physical spreads were mainly flat over the month.

Australian Fixed Income: Market Commentary - August 2014

At its 2 September meeting, the Reserve Bank of Australia again left the official cash rate on hold at 2.50%, and the Australian Industry Group’s Performance of Manufacturing Index slipped back into negative territory in August, following a brief stabilisation in July.

Update on Eurozone External Accounts

As for the entire Eurozone, its trade surplus in goods and services remains near record highs, but it is not increasing further, so it is no longer supportive of GDP growth.

Update on GIIPS' External Accounts

Regarding our long-standing theme of rebalancing in the Eurozone, recent trends have been more negative, so we offer this summary with some relevant charts.