Nikko AM's Global Investment Committee updates house view, maintains overweight equities stance

Press Release

10 October 2013
  • Continue global equities overweight; European and Japanese equities particularly attractive
  • Continue to underweight G-3 bonds (US, Eurozone and Japan), as well as JGBs relative to ex-Japan bonds
  • Japan’s GDP in the second half of 2013 expected to be above consensus; Abenomics reforms beginning to take hold

Nikko AM’s Global Investment Committee (GIC), which consists of senior investment professionals from the group’s global offices, has updated its views on the global economic situation, financial markets and asset allocation calls. The committee meets at least quarterly and its views form the basis of Nikko AM’s quarterly asset allocation house view.

In the latest GIC meeting, the committee concluded that equity markets remain attractive and forecast that the MSCI World Total Return Index will increase 4.0% by March 20141 . Both the economies of the U.S. and Japan have shown strong signs of growth, while the Eurozone economy has improved significantly. In China, the economy has stabilised somewhat, while inflation remains tame.

“Nikko AM maintains its two-year overweight stance on global equities, with a preference for European and Japanese equities,” said John F. Vail, Chief Global Strategist and Chair of the Nikko AM Global Investment Committee. “In our view, Japan’s Gross Domestic Product (GDP) in the second half of 2013 will be above consensus due to low inventories, and we expect this will provide a boost to financial markets. The consumption tax in Japan, which will be lifted to 8% from 5% next April, is likely to cause a dip in 2014 second quarter GDP, but we expect growth to recover promptly. Further evidence of strong economic growth will pave the way for additional reforms to be implemented under Abenomics.”

On the fixed income side, the house view is to continue an underweight stance on G-3 bonds, particularly underweighting Japanese Government Bonds relative to ex-Japan bonds. Targets for 10-year bonds as at March-end 2014 are 3.00% for US Treasuries, 0.85% for Japanese Government Bonds (JGBs) and 2.20% for German Bunds.

"We expect the yen to weaken further in the quarters ahead, as the Bank of Japan maintains its easing stance relative to the expected tapering measures from the Fed," Vail said. "After the September Federal Open Market Committee (FOMC) meeting, we now expect tapering to start in December or January, Quantitative Easing (QE) to end in the third quarter of 2014 and the first rate hike in the second quarter of 2015. We believe the U.S. government shutdown will be short-lived and that investors would be best advised to hold onto risk positions through the turbulence. "

1 From base date September 24, 2013

– ENDS –

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About Nikko Asset Management

With USD203.9 billion* under management, Nikko Asset Management is one of Asia’s largest asset managers, providing high-conviction, active fund management across a range of equity, fixed income, multi-asset and alternative strategies. In addition, its complementary range of passive strategies covers more than 20 indices and includes some of Asia’s leading exchange-traded funds (ETFs).

Headquartered in Asia since 1959, Nikko Asset Management and its subsidiaries employ personnel representing around 30 nationalities, including approximately 200 investment professionals**. The firm has a presence through subsidiaries or affiliates in a total of 11 countries and regions. More than 400 banks, brokers, financial advisors and life insurance companies around the world distribute the firm’s products.

The investment teams benefit from a unique global perspective complemented by the firm's historic Asian DNA, striving to deliver consistent excellence in performance. The firm also prides itself on its progressive, solution-driven approach, which has led to many innovative funds launched for its clients.

For more information about Nikko Asset Management and to access its investment insights, please visit the firm’s homepage.

* Consolidated assets under management and sub-advisory of Nikko Asset Management and its subsidiaries as of .
** Including employees of Nikko Asset Management and its subsidiaries as of .

Important Information

This document is for information only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. Any securities mentioned herein are for illustration purposes only and should not be construed as a recommendation for investment. You should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in unit trusts are not deposits in, obligations of, or guaranteed or insured by Nikko Asset Management Asia Limited (“Nikko AM Asia”). Past performance or any prediction, projection or forecast is not indicative of future performance.

The information contained herein may not be copied, reproduced or redistributed without the express consent of Nikko AM Asia. While reasonable care has been taken to ensure the accuracy of the information as at the date of publication, Nikko AM Asia does not give any warranty or representation, either express or implied, and expressly disclaims liability for any errors or omissions. Information may be subject to change without notice. Nikko AM Asia accepts no liability for any loss, indirect or consequential damages, arising from any use of or reliance on this document.


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