Insights

Investment Insights by our experts and thought leaders

Central Bank Watch - September 2014

Sentiment about Fed policy remains very volatile, but Yellen has remained remarkably stable in her outlook and bond prices have remained under control during the transition away from ultra-accommodative levels.

G-3 Economies Should Be Fine

Nikko AM’s Global Investment Committee met on September 26th and updated our house view on the global economic backdrop, financial markets and investment strategy advice. In sum, there certainly are some worrisome issues, as always, but we find none of them convincing enough to halt the upward momentum in equity prices.

Asian Fixed Income Monthly Outlook - September 2014

The minutes from the July Federal Open Market Committee (FOMC) minutes revealed that several participants favoured raising rates sooner than previously anticipated, if inflation and employment prints continue to improve more rapidly than the US Federal Reserve’s (Fed) expectations.

Asian Equity Monthly Outlook - September 2014

Asia Pacific ex-Japan markets gave back some of the year-to-date (YTD) outperformance versus its global peers. The MSCI Asia Pacific ex Japan index returned 0.8% in the month of August, underperforming the MSCI World by 1.4%.

The US dollar has been gaining against the yen since mid-August and is currently trading at around ¥106, as the yen continues to weaken and the dollar strengthens.

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.

Asian Fixed Income Monthly Outlook - August 2014

Improving US economic fundamentals have marginally offset the heightened geopolitical concerns in Russia/Ukraine and Israel/Gaza, leading to the sell-off in risk-free assets in July.

Asian Equity Monthly Outlook - August 2014

Asia Pacific ex-Japan markets outperformed their global counterparts, bolstered by strong price returns in China and Hong Kong which were up 7.3% and 6% in USD terms respectively.

The Japan Update – Improved ROE could spur Japan stocks higher

As part of its growth strategy, the Japanese government has proposed strengthening corporate governance. The proposal aims to enhance the profitability of private sector firms and ultimately to improve the economic lot of the general population.

The Japanese market for IPOs is booming once again. Following the collapse of Lehman Brothers and the global financial crisis, the number of IPOs in Japan went into decline. However, after new listings hit bottom in 2009, they have gradually recovered, with increases in the number of IPOs in each of the last four years.

The Japan Exchange Group, which runs the Tokyo Stock Exchange (TSE), announced on 7 August that the composition of the JPX-Nikkei Index 400 will change for the first time since the index was created in January of this year.

The impact of US high yield bonds sell-off on Asian Credits

US high-yield funds, both exchange-traded and mutual funds, have seen heavy outflows in July with almost USD 10bn of outflows in the month, according to Standard Chartered Bank Weekly Fund Flows reports.

Super-Abenomics Key Performance Indicators - July 2014

Domestically produced goods and imported finished consumer goods both rose mildly MoM. This must be causing much doubt at the BOJ about achieving the 2% Core CPI target.

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.

Japan's Dividend Resurgence: “Show Me the Money”

Last month we described Japan’s “Show me the Money” corporate governance as regards the sharp rise in corporate profit margins to new highs. This theme is paralleled by the trend in dividend payments.

Asian Fixed Income Monthly Outlook - July 2014

During the Federal Open Market Committee (FOMC) meeting in June, the US Federal Reserve (Fed) announced an additional USD 10bn per month in tapering, while keeping the target rate at 0.25%.

Asian Equity Monthly Outlook - July 2014

Asia Pacific ex-Japan markets performed in-line with global counterparts returning 1.7% in USD terms versus 1.8% for MSCI World.

The plan to lower Japan’s corporate tax rate as part of the government’s growth strategies is attracting a great deal of attention from the markets, but equally important is the government’s initiative to strengthen corporate governance and to change how company managers think about governance.