Insights

Investment Insights by our experts and thought leaders

Asian Equity Monthly Outlook - December 2014

Asia Pacific ex-Japan markets were volatile in November, with the MSCI Asia Pacific ex-Japan Index down 1.3%, dragged down by MSCI Australia Index which returned -6.3% in USD terms.

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.

Active management of credit more effective over the longer term than a target-seeking strategy

As we move further away from the turbulent period between 2007 and 2009, interest in credit has increased rapidly as investors globally search for extra return in a low yield environment.

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.

Recession in Japan? 3 Key points to remember (again)

The three main points from our prior report on this topic have not changed; however, there are a few more anomalies in the data this time.

The Japanese equity market for the most part maintained a strong tone in 2014, with the Nikkei Stock Average at one point in December rising intra-day above JPY18,000 - a level it had not seen since July 2007.

With a slowdown in consumer demand following the April consumption tax hike, a second straight quarter of negative GDP growth in July-September, and unseasonably cold weather resulting in an even further drag on consumption, Japan appears to be only halfway through to achieving its goals of putting an end to deflation and reviving the economy.

The Asian Credit Market

Growth continues to be a strong theme in Asia making the case for investing in the region a compelling one. The Asia ex-Japan (AxJ) region has more than doubled its share of the global economy since the Asian financial crisis.

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.

Japan's Profitability: "Show Me the Money" Corporate Governance

Japan's Profitability: "Show Me the Money" Corporate Governance

Equity investors should not fret too much about weak macro data, as Japanese companies have been able to overcome such for nearly a decade through rationalization and improved corporate governance.

Point of View: On Moody's Japan Rating Downgrade

Moody's downgrade of Japan to A1 will likely have very little effect on bond yields, the economy or risk-asset psychology. The major reason why is due to its odd premise of predicting too much success of Abenomics, while most market observers are not so optimistic.

Recession in Japan? 3 Key points to remember

Three important things to know about the recently announced Japanese GDP statistics that indicated that the country was in a recession.

Debunking Demographics

We examined the relationship between a country's working age population and its listed company corporate earnings for ten nations, and found that the relationship is ambiguous at best, with correlations ranging from positive to strongly negative.

Asian Fixed Income Monthly Outlook - November 2014

US Treasuries (UST) rallied in October – a month that saw dramatic movements across asset classes. The US Federal Reserve (Fed) ended its bond-buying program following the October policy meeting.

Asian Equity Monthly Outlook - November 2014

Asia ex-Japan markets bounced back towards the end of October returning 2% for the month in USD terms and outperforming the MSCI World index by 1.4%.

Amid the continued recovery in the U.S. economy and announcements of strong economic indicators, the Federal Reserve Board announced on 29 October its decision to discontinue its programme of asset purchasing and quantitative monetary easing.

Amid continued downward pressure on prices, the Bank of Japan (BOJ) decided to ratchet up its quantitative and qualitative easing program at its Monetary Policy Meeting on 31 October.

US mid-term elections: Republican control of Congress likely to lead to gridlock with President

Although there are potential flashpoints, there are some areas where the US President may be more willing to cooperate with the new Congress — such as being awarded the authority to fast track trade agreements, particularly the Trans Pacific Partnership (TPP)

Japan’s Key Factor: the Wealth Effect

We have long reported on the role of the wealth effect, as its importance is vastly underestimated by local and foreign investors. The 2Q data for net financial assets shows a QoQ increase to a new historical high.

Official Support for Japan’s “Show Me the Money” Theme?

Update on Japan’s “Show me the Money” corporate governance — the dividend paid by TOPIX continues to rise towards its historic high, but the payout ratio has been stagnant for the past few months, as earnings continue to rally equally well.

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.

Our View on the Recent Market Turbulence

Our house view is that non-economic factors played the largest role in the recent market turbulence. We discuss these below and forecast their future development.

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.