Japanese stocks were not spared the global selloff in early February. While we would not be surprised to see volatility persist as market conditions normalise, we continue to expect healthy returns for risk assets such as equities.
A broad-based synchronized recovery continues to gain traction. Following the strongest year of global growth since 2010 (estimated at 3%) the consensus forecast for the current year looks to be even rosier.
The Bank of Japan (BOJ) has been trimming its bond purchases lately, fuelling speculation that the central bank may wind back its monetary stimulus this year.
The MSCI AC Asia ex Japan Index returned 7.6% in USD terms in January, amid optimism about solid economic growth and corporate earnings. China's solid stock market gain was underpinned by the financials, energy and real estate sectors.
There was a sharp rise in US Treasury yields in January on the back of positive macro news, steady rise in oil prices and speculation that central banks in developed markets will start winding back on stimulus measures.
A broad-based synchronised recovery continues to gain traction. Following the strongest year of global growth since 2010 (estimated at 3%) the consensus forecast for the current year looks to be even rosier.
As widely expected, the US Federal Reserve (Fed) raised interest rates by 25bps in December, its third rate hike this year. It also raised its GDP forecast for 2018.
The MSCI AC Asia ex Japan (AxJ) Index returned 2.7% in USD terms in December.
The Japanese equity market rose in December, with the TOPIX (w/dividends) climbing 1.57% on-month and the Nikkei 225 (w/dividends) rising 0.32%.
We see the key investment themes to drive performance in Global Credit in 2018 to be similar to last year. Using the output of our initial market assessment, we have developed our investment themes: Long US High Yield, Long Chinese Tier1 SOEs, Long European Hybrids, Long European Financials, Long Rising Stars.