Investment Insights

 

Could ESG reporting rules spark an EU-US trade war?

The US presidential election in November continues to cast a long shadow, and as the race between the 45th (Donald Trump) and 46th (incumbent Joe Biden) presidents quickens, divisions have only widened. The investment world is no exception, and one particularly troubling battleground is the growing regulatory divide regarding ESG reporting.

Navigating Japan Equities: Monthly Insights From Tokyo (May 2024)

This month we analyse why the influence of capex and wages on spending behaviour are key to gauging whether an inflationary mindset is taking hold among households; amid an adjustment by Japanese stocks from record highs, we also look for growth narratives to sustain a long term uptrend.

New Zealand Equity Monthly (April 2024)

New Zealand is seeing its first set of climate-related disclosures. Under this regime which began in January 2023, large organisations release "climate statements" about the potential impact of their operations on the climate and vice versa, according to standards set by the country’s External Reporting Board.

Investing in Japan: an insider's perspective with Naomi Fink

Naomi Fink recently joined Nikko Asset Management as a Global Strategist based in Tokyo. We sat down with Naomi to discuss her personal relationship with Japan, and to hear her views on arguably the most talked-about investment region in the world at present.

Global Equity Quarterly Q1 2024

Dreams have a place in the world. However, in stock markets, cashflows often serve as gravity when share prices display dream-like behaviour. Fortunately, our Future Quality philosophy, coupled with our consistent process of reviewing the portfolio and ranking stocks, will help us separate dreams from reality. As a result, the portfolio is performing well, especially due to stock selection outside of AI and across all sectors.

BOJ stands pat on policy but paves way for future rate hikes

The Bank of Japan kept interest rates steady as expected while upping its CPI forecast, paving the way for future rate hikes. Any further hawkish stance by the BOJ may depend on the persistence of positive real wages and inflation's impact on consumer purchasing power.
Inflation uncertainty seems increasingly entrenched, which is less kind to developed market sovereign bonds. The US fiscal deficit is very large, and the Federal Reserve (Fed) is now in the challenging position of deciding when to cut rates. Energy remains a good hedge in this environment, and gold is increasingly being recognised as a store of value.
The Chinese economy and its equity market continue to be significant focal points in broader Asia. Additional support measures, combined with a recalibration of market expectations, have helped Chinese equities recover from the panic selling witnessed towards the end of 2023 and into January. As a result, fundamental strengths are being recognised in certain areas.
We maintain a positive outlook for Asian local government bonds, particularly those from India, Indonesia and the Philippines. In our view, the disinflation trends in these countries should provide their central banks with the flexibility to shift towards rate cuts later in the year.

Of volcanic activity and Asian fixed income markets

We highlight the importance of making decisions based on probabilities and the best expected outcomes, assessing relevant information and acting ahead in constantly changing market conditions.

Navigating Japan Equities: Monthly Insights From Tokyo (April 2024)

The Bank of Japan (BOJ) lifted interest rates for the first time in 17 years in March, making a historic departure from negative interest rates. We provide an overall evaluation of its decision, discuss how long accommodative monetary conditions could still last, analyse the yen’s potential policy impact and assess the BOJ’s options after halting ETF purchases.

Global Investment Committee’s outlook: stronger for longer

The Global Investment Committee sees robust corporate earnings, firm employment and expectations for rate cuts keeping markets more buoyant than anticipated by average consensus estimates.

Future Quality Insights: healthcare offers diversification from market hot spots

We remain very strong supporters of the healthcare sector. In addition to the well-known demographic drivers, innovation is enabling structural changes in healthcare delivery and in our view these changes will confer years of strong organic growth opportunities if we choose the right companies.
Japanese households, long under-invested in financial markets, are expected to play a significant part in the country’s “virtuous circle” of reflation as they seek returns capable of keeping up with inflation.

Trump vs. Biden II: what implications could the US election have for sustainable fixed income?

The stage is now set for a Biden versus Trump rematch in November. So, what does this mean for sustainable bonds?
Improving economic dynamics defy conventional logic of what one would expect from one of the most aggressive tightening cycles in history. However, if one considers the magnitude of the 2020 expansion in money supply, there is still significant excess liquidity, perhaps transmitting to resilient demand and cash flow that so far exceeds the headwinds of higher rates.
We think that there could be some short-term rebound in China as valuations are in extreme oversold territory. However, for the rally to be more sustainable, we are monitoring for a few drivers, including supply-side measures that can resolve China’s main housing issues.
We maintain a positive outlook for Asian local government bonds, particularly India, Indonesia and Philippine bonds. In our view, the disinflation trends in these countries should provide the Reserve Bank of India, Bank Indonesia and Bangko Sentral ng Pilipinas with the flexibility to shift towards rate cuts later in the year.
The Asian REIT market is the second-largest REIT market globally, but there is still plenty of room for growth. As REIT regulations and listing processes become increasingly market-friendly in newer REIT markets, we expect more asset owners to securitise their real estate into REIT products, driving greater investor interest.

BOJ takes significant yet incremental step on path back to “normal” rates

The “trial balloons” of media announcements in advance of today’s interest rate hike by the Bank of Japan —its first in 17 years—apparently did their job, as the end of its negative interest rate policy, yield curve control and ETF purchases were smoothly digested by markets.