Nikko AM Confirms Neutral Position on Global Equities

Press Release

7 April 2014
  • Sees Abenomics Working Well in Boosting Corporate Profits

An overweight stance on global equities that lasted for over two-and-a-half years has been cut to neutral by Nikko Asset Management's Global Investment Committee (GIC), the company announced today. In confirming the provisional decision made in early March, the Tokyo-based asset manager cited the following concerns:

  1. Heightened fear of geopolitical risk,
  2. Accelerating deterioration of China's economy and financial system,
  3. Subpar US and Japanese economic growth, and
  4. Little room to re-rate Western equity valuations and continued deterioration in earnings estimates.

"We believe equity valuations have peaked and that markets will trade nervously going forward. On top of that, unsettled geopolitics make us uncomfortable and the fallout from China's reform efforts could cause some shocks," said John F. Vail, Chief Global Strategist and GIC Chairman. "In a few markets we expect equities to do well, but against the tunnel of uncertainty looming out thereand given the slim difference between our bond and equity return forecastswe feel a neutral view on global equities versus bonds is warranted."

Vail expressed his views in the firm's most recent Evolving Markets research report. Elsewhere in the report, analysts reported that 2013 fourth-quarter data on overall corporate profits in Japan (including unlisted companies) was very positive, with a record-setting quarter-on-quarter increase in the pretax recurring profit margin, while the four-quarter average hit a new high of 4.6%.

The report concludes that several other indicators confirm that Abenomics is working much better than the pessimists suggest.

– ENDS –

For inquiries, please contact:

Jeanie Cheah
Tel: +65-6500-5793

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

Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets which are targeted by the fund is not necessarily indicative of the future or likely performance of the fund. Nikko AM Asia reserves the right to make changes and corrections to the information, including any opinions or forecasts expressed herein at any time, without notice. Nikko AM Asia accepts no liability for any loss whatsoever arising from any use of or reliance on any of the opinions expressed. Whilst Nikko AM Asia believes that the information is correct at the date of production, no warranty or representation, whether express or implied, is given to this effect and Nikko AM Asia expressly disclaims liability for any errors or omissions. The information contained in this document is given on a general basis without obligation and on the understanding that any person acting upon or in reliance on it, does so entirely at his or her own risk.

Nikko Asset Management Asia Limited, Registration Number 198202562H

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