Volatility has arisen as we expected it eventually would, and September is often an apt month to rediscover risk given market participants’ return from summer vacations noting that record high equity markets do not quite square with a number of significant risk events on the near-term horizon.
Asian stocks fell in September, with concerns about China’s growth outlook and the US Federal Reserve (Fed)’s taper plan being the key drivers of sentiment. For the month, the MSCI AC Asia ex Japan Index declined by 4.2% in US dollar (USD) terms.
The equity market reaction to New Zealand’s second COVID-19 lockdown has been far more muted than the first time similar restrictions were imposed. The first lockdown from March 2020 caused an aggressive sell-off as investors and companies alike adjusted to a completely unprecedented situation.
We provide an update of Japan’s political calendar as the new Prime Minister Kishida leads the ruling party into a 31 October general election, which could have a significant market impact. We also discuss what the recent China-related volatility could mean for the Japanese market.
Since the Reserve Bank of New Zealand (RBNZ) postponed a widely expected rate hike in August, pricing in the market has pulled back, supporting a view that the central bank will hike rates by 25 basis points (bps) at each of its next three policy meetings.
As expected by most observers, Mr. Kishida won the Liberal Democratic Party presidential election in the second round with a sturdy, though not overwhelming, 60% of the vote. He will be formally named prime minister next week and will likely form a relatively youthful cabinet, with females in several major posts.
Out of the six scenarios presented, a narrow majority of our committee agreed again on a positive scenario in which the global economy matches the market consensus for solid growth, while equities continue to rally.
The past five years have been the hottest since records began. In the decade to 2020, global surface temperatures were 1.09C higher compared to the pre-industrial era (1850–1900)1. The Intergovernmental Panel on Climate Change (IPCC) warns that stabilising global warming below the 1.5C level is critical to avoiding the most extreme impacts on ecosystems and human health.
Concerns over property developing giant China Evergrande Group defaulting on its debt have rippled across the global financial markets. In the Asian high yield (HY) space, spreads have widened recently on the Chinese government’s tightening of its property sector and increasing default risks associated with the sector in the wake of developments related to Evergrande
Inflation is on everyone’s mind. From central bankers to bakers, it is one of the biggest topics of discussion. The prices of many commodities are rising sharply. The reasons vary. Supply constraints, sharp rise in demand or bad weather—take your pick.
As we contemplate a post-pandemic world, it is becoming more likely that things will not return to “normal” as we once knew it. While vaccines have been highly successful in preventing serious illness in those who are still contracting the virus, the Delta variant of COVID-19 is also proving to be harder to contain.
US Treasury (UST) yields rose in August, prompted by data showing stronger-than-expected US employment growth. The rise in rates was supported by hawkish comments from some US Federal Reserve (Fed) officials.
The world is settling into a new normal that is likely to look quite different from pre-COVID-19 norms. This includes different patterns of demand shaped by learning to live with the virus and an ongoing fiscal thrust with firm policy objectives.
With the reporting season in full swing, this month we turn our attention to New Zealand’s corporate results and announcements. In particular we focus on the COVID-19 pandemic and its effect on such results and highlight how changing demographics have provided opportunities for certain sectors.
The detection of New Zealand’s first COVID-19 Delta variant infections and the subsequent decision by the Reserve Bank of New Zealand (RBNZ) to postpone a widely expected rate hike muddied the country’s outlook in August. The economy was previously running at a strong pace with unusually high inflation of 3.5% and very low unemployment.
Asian stocks gained in August. While concerns about the spread of the Delta variant weighed on markets at the beginning of the month, the US Federal Reserve (Fed)’s dovish commentary and a rebound in the battered Chinese technology (tech) sector lifted sentiment towards the month-end
The news of Prime Minister Suga’s impending resignation triggered a rally in Japanese equities this week, with the market hoping that a new administration will bring the COVID-19 outbreak under control and hasten the normalisation of the economy. We explain what the market expects from the new administration and assess the implications of Japan’s upcoming general election.
Japan’s drive to embrace hydrogen as an alternative energy source is an opportunity to identify hidden value in firms that are willing to tackle and resolve social issues.
The just released 2Q CY21 data on aggregate corporate profits in Japan was surprisingly positive, as the overall corporate recurring pre-tax profit margin surged relatively near its record high in the 3Q CY18.
The three Japan-related news topics that have overwhelmingly dominated the attention of Western media so far this year are COVID-19 (by far), the Tokyo Olympics and the showdown at Toshiba.
The Tokyo summer Olympics have been a welcome distraction over the last few weeks and well done to Japan for hosting the games so successfully in the current environment. In particular it is inspiring to see the years of preparation and planning being showcased by the top competitors in their respective sports.
Asian stocks suffered losses in July, weighed down by the selloff in Chinese equities following Beijing’s regulatory crackdown on the private tutoring and technology-related sectors.
Cross-asset pricing has recently been challenging our reflationary outlook. When we first discussed the prospects for reflation about a year ago, we identified a number of key factors.
This month we turn our focus to environment, social and governance (ESG) issues. ESG is firmly in the spotlight at present, and this trend will only intensify in the future. In global terms, Europe’s level of ESG legislation is more advanced than New Zealand’s and ESG is more of a hot topic there.
New Zealand’s bond market performed well overall in July, although the long term sector outperformed its short term peers significantly.
The US Treasury (UST) curve bull flattened in July. The Federal Open Market Committee (FOMC) meeting was largely uneventful, although the forward guidance on asset purchases was tweaked slightly to indicate that progress had been made towards the Committee’s goals although still shy of the “substantial further progress” needed for the start of tapering.
Our philosophy is centred on the search for “Future Quality” in a company. Future Quality companies are those that we believe will attain and sustain high returns on investment. ESG considerations are integral to Future Quality investing as good companies make for good investment
We talk about the importance of staying focused on the broader implications of Japan’s corporate governance reforms when misconduct at major companies make the headlines; we also discuss the prospects for real estate and whether the market presents a bargain.
Japan’s economy should boom after the Olympics burden passes. Its stock market will likely rebound sharply too, but one item that has limited Japan’s equity culture, and thus, its wealth, especially for wary pensioners, is overly conservative guidance by corporations for upcoming fiscal year earnings.
As we roll into the August lull, we cannot help but ask the question: Where has the reflation trade gone? Expectations were for a display of heroism by the Federal Reserve (Fed) with Chair Jerome Powell announcing his grand taper plan at the Jackson Hole symposium, but I guess we will still have to wait for the big reveal.
New Zealand’s bond market was relatively flat in June, although most sectors were on the positive side. Looking ahead, New Zealand appears set to track the US, where interest rate hikes could now happen as early as 2022.
This month, we take a look at the current state and prospects of New Zealand’s five main electricity generators/retail providers. Almost all the electricity in New Zealand is generated by five companies: Genesis Energy, Contact Energy, Meridian Energy, Mercury Energy and Trustpower.
This is the likely phrase one will often hear in a few weeks, especially among equity investors and Japan’s political leadership. Of course, there are currently very few people in Japan who are very enthusiastic about holding the Olympics and virtually everyone would agree that it is a burden, but only the International Olympic Committee (IOC) can cancel an Olympics.
Asian stocks edged lower in June, partly weighed down by a recent spike in COVID-19 cases in the region. Lingering worries about rising inflation and fears of a faster-than-expected tapering of the US Federal Reserve’s quantitative easing programme also dampened sentiment.
The US and China are likely reaching peak growth as stimulus and the initial burst of pent-up demand begin to wane. In China, while the credit impulse has turned negative—usually an ominous sign—demand continues to normalise, shifting from outsized demand in manufacturing back to normal patterns of consumption with authorities still fine-tuning the extension of credit to the parts of the real economy that need it.
The US Treasury (UST) yield curve flattened in June, with short-dated bonds underperforming. The Federal Reserve’s (Fed) hawkish pivot caused the UST curve to flatten aggressively mid-month.
We discuss what global inflation could mean for Japan, with the country having struggled extensively with deflation; we also assess the BOJ‘s plan to boost funding for mitigating climate change and what that could mean in the longer run from a corporate governance perspective.
The momentum gained by the global credit market in 2020 has continued into 2021 and we appear to be on track for another strong year of performance. Low government bond yields, ample liquidity and improving credit quality have supported a market that now trades with spreads at all-time lows in some pockets.
Japan’s stock market does not deserve many of the ages-old worries and criticisms. Indeed, while not every company or circumstance is perfect, its performance, though lower than that of the US, has steadily outperformed, in constant currency terms, its other main global market rival, Europe, since late 2012 when Shinzo Abe was elected to lead the LDP.
Out of the six scenarios presented, a solid majority of our committee agreed again on a positive scenario, in which the global economy matches the market consensus for very strong growth, while equities continue to rally.
The New Zealand equity market has been blessed by strong upward revisions in corporate earnings and a robust macro framework, with the country further along than its peers in a V-shaped recovery from a COVID-19-induced downturn.
We believe that the recent rise in New Zealand’s interest rates has put the bond market in a good place, as the alternative may have been a negative interest rate regime instead. Without higher interest rates the government would have found it difficult to fund itself, as the country’s bonds may not have otherwise been attractive to offshore investors.
After many years of trying to stimulate inflation, central banks are now facing inflation levels that are far exceeding recent trends. In May, eurozone inflation rose to 2% and in the US core inflation reached 3.8% (almost a 30-year high).
The 2007-2008 global financial crisis had a lasting impact on public and private pension funds, as the collapse of Lehman Brothers and massive fraud committed by Wall Street money manager Bernie Madoff placed greater emphasis on fiduciary obligations and manager due diligence.
Grace Yan, a Senior Portfolio Manager and a member of the Nikko AM Asian Equity Team, talks about the underlying reasons behind her recent success in winning Citywire Asia’s Best Fund Manager award and her passion about uncovering hidden gems in the Asian small-cap equity arena.
Supported by optimism about the region’s ongoing economic recovery, Asian stocks delivered decent gains in May, shrugging off concerns about a spike in COVID-19 cases in several Asian countries and persistent worries about inflation.
US Treasury (UST) yields traded in a relatively narrow range in May. Inflation fears resurfaced, prompted by rising commodity prices and a marked increase in headline consumer and producer price indices in the US.
We believe that Asian REITs will continue to perform well while the economic recovery in Asia and the rest of the world remains strong and as long as the rise in bond yields do not become excessive.
We explain why corporate earnings in FY21 are expected to begin reflecting recovering confidence among Japanese companies as vaccine rollouts gain momentum. We also look into the BOJ’s trial run for a digital yen and the impact such a currency could have on the economy and markets.
Wer hat nicht schon einmal zu Hause gesessen und den Fernseher angeschrien, weil ein Kandidat in einer Quizshow eine offensichtlich falsche Antwort gab? Zweifel, Frustration und Hilflosigkeit fühlt man häufig in dieser Situation. Wenigstens kann man am Ende meist darüber lachen.
With the recent rise of nationalism in China, many foreign brands operating in the world’s second largest economy are now treading very carefully in their marketing campaigns and public communiqué.
While the Japanese equity market managed to strongly rebound in 2020 after a sharp fall at the start of the pandemic, it has lagged its peers in 2021 amid the country’s struggle to contain COVID-19 and its slow rollout of vaccinations.
Until recently, Japan was lauded as one of the few countries that successfully limited the COVID-19 outbreak. However, more than a year into the pandemic, Japan’s slow vaccine rollout is coming under increased scrutiny with the country lagging far behind its G7 peers in vaccinations.
Asian stocks turned in decent gains in April on optimism about the region’s economic recovery, especially after China and several other Asian countries reported better-than-expected 1Q21 GDP growth. The MSCI AC Asia ex Japan Index gained 2.5% in US dollar (USD) terms over the month.
US Treasury (UST) yields stabilised in April. Yields came off despite domestic data confirming that the US economy had gained momentum, and inflation numbers that were above market expectations. The Federal Open Market Committee statement announced no new changes to the direction of monetary policy but offered a more upbeat tone on the outlook.
"Nowadays people know the price of everything and the value of nothing", quipped Oscar Wilde.
We gauge Japan’s slow vaccine rollout from an economic perspective and assess the shift in work styles that occurred during the pandemic and its potential impact on real estate prices.
Asiatische Aktien mit geringer Marktkapitalisierung (Small Caps), die von 2016 bis 2019 von den Märkten weitgehend übersehen wurden, haben in letzter Zeit die Aufmerksamkeit der Anleger auf sich gezogen.
The striking 52% year-on-year surge in prices of second-hand US vehicles has, as expected, caught market attention, with global chip shortages often blamed for the disruption in the market for used cars. Behind the scenes, however, stands Joe Biden, the US incumbent president, whose first 100 days in the office was marked by several milestones, some of which could quite convincingly add more “meat” to the story.
Emerging Markets (EM) debt began 2021 by consolidating after an exceptional performance at the end of 2020. The negative performance was mostly driven by a widening of US Treasury yields while spreads remained broadly unchanged.
Our philosophy is centred on the search for “Future Quality” in a company. Future Quality companies are those that we believe will attain and sustain high returns on investment. ESG considerations are integral to Future Quality investing as good companies make for good investment.
The global credit market saw a positive start into the year in Q12021 as spreads continued to tighten. However, total returns were negatively impacted by the global move toward higher rates. At the beginning of 2021, cyclical sectors came back to the forefront and outperformed. Energy and automotive sectors were among the winners, while utilities lagged the rally.
The UST yield curve steepened further in March as stronger-than-expected domestic economic data prints, passage of the US dollar (USD) 1.9 trillion stimulus package and a ramp-up in the rate of US vaccinations amid slowing daily infection rates prompted investors to increasingly price in accelerating growth in the coming quarters.
Asian stocks succumbed to profit-taking in March as hopes over a vaccine-led regional economic recovery were overshadowed by persistent reflationary concerns and rising global bond yields. The MSCI AC Asia ex Japan Index fell by 2.5% in US dollar (USD) terms over the month.
Does investing in palm oil companies pose a controversy or present an opportunity? Here is a deep-dive analysis of the palm oil sector and the material ESG issues facing it. All in all, we believe that positive ESG changes represent a strong opportunity for palm oil companies, and we look for candidates that strive towards sustainability goals and exceed their ESG targets.
Following a tumultuous 2020 marked by the COVID-19 pandemic, global growth in 2021 is expected to improve on the back of positive vaccine developments and continued government measures. However, the pace of recovery is likely to be uneven among economies and fears of a resurgence of COVID-19 linger. It would be presumptuous to say that we are finally out of the woods.
We provide our view on the Bank of Japan’s latest policy review, under which the central bank decided to allow long-term rates to fluctuate in a wider band and removed its annual target for ETF purchases. We also assess the barring of foreign spectators from the Olympic games.
A large majority of our members agreed on a positive scenario in which the global economy mildly outperforms market consensus, while equities continue to rally.
In February 2021, Japan’s Nikkei Stock Average reached JPY 30,000 for the first time in over three decades. We believe that equities will keep rising, and that amid this shift in the broader market Japanese value stocks are on the cusp of a long-awaited turnaround.
Asian stocks gained in February as investors upheld optimism about a vaccine-led regional economic recovery. The MSCI AC Asia ex Japan Index rose 1.2% in US dollar (USD) terms over the month.
The potential return of long-muted inflation sparked a meaningful jump in US Treasury (UST) yields in February. Fears of rising price pressures were prompted by the combination of robust domestic data, positive development on the COVID-19 vaccine front and an anticipated increase in US federal spending. Overall, 2-year and 10-year yields ended the month at 0.13% and 1.41%, respectively, about 1.9 basis points (bps) and 34 bps higher compared to end-January.
For corporate bond investors one of the most important points of discussion is spreads. Spreads are the industry term for the risk premium an investor aims to earn in the corporate bond market. It is the difference between the yield a bond is promising and the risk-free rate. If spreads are narrowing it is positive for investors as the price of the corporate bond will increase; likewise, a widening leads to a lower bond price.
We assess the factors that enabled the Nikkei to rise above the 30,000 threshold for the first time since 1990; we also view the recent Robinhood frenzy from a Japanese market perspective.
The investment industry is constantly searching for ways to improve its decision-making processes. Some firms increase their research teams while others move into quantitative fields such as machine learning. Amid this constant search, we focus on an alternative way to enhance the quality of our decisions; mindfulness can make the difference between a rushed, emotional decision and a thoughtful, rational conclusion.
In 2020 the COVID-19 pandemic negatively affected a wide variety of Japanese assets, including the real estate investment trust (J-REIT) market. J-REITs have bounced back since, but their recovery has been sluggish compared to the Japanese equity market’s rebound. Despite the slower recovery, we believe J-REITs have ample upside room once the rise gathers pace.
The last 12 months have seen a significant rotation of topics discussed at investment meetings worldwide. The agenda has moved from macroeconomic data to infection rates, hospitalization rates, vaccinations and other issues related to the COVID-19 pandemic.
We continue to spend the vast majority of our time on company research and there are doubtless other observers better placed to predict which path that the market will go down, but it seems more likely to us that the future will look much like the pre-COVID-19 recent past. For instance, central banks have become increasingly politicised in recent years. At the same time, many national governments are more indebted than ever, having rushed through huge wage support programmes—designed to postpone a severe economic reckoning as a result of the lockdowns that they imposed.
We believe 2021 will be remembered as a year that marked the beginning of the end of the COVID-19 crisis as the world develops vaccines to counter the pandemic. In Japan, we expect a gradual recovery of its economy in 2021, as the pandemic’s impact lessens, and economic activity normalises.
We expect North Asia to continue to lead the region’s recovery (at least in the first half of the year). But we also expect the growth divergence between North Asia and the rest of the region to narrow. Unprecedented fiscal support from governments have been pivotal to the ongoing recovery. We expect fiscal action to continue in the coming year but anticipate renewed private sector confidence as the vaccine becomes broadly available and provides a powerful tailwind to regional growth.
Asian countries have, by and large, handled the COVID-19 pandemic better than their western counterparts and are now emerging from that nadir. Most of these countries have plenty of fiscal and/or monetary stimulus headroom. And this superior growth and better national finances are available at a significant discount to developed markets. A languid US dollar will enhance local currency returns in these “risk assets”.
The global markets surged in 2020 despite the COVID-19 pandemic. While we expect the liquidity-driven rise to continue for a while, we should be prepared for the tide to eventually turn. We identify Japanese industries, notably “Delta ESG” stocks, that could become sources of alpha in the post-pandemic world.
Ein weiteres Quartal vergeht und wir sind (jedenfalls hier in Großbritannien) immer noch sehr eingeschränkt, was das Reisen und das Zusammenkommen in Büros angeht. In meiner Freizeit suche ich oft vergeblich nach unverbrauchten und interessanten neuen Inhalten, nur um dann auf altbewährte Filme wie die Bourne-Reihe zurückzugreifen.
Die Corona-Pandemie hat in Japan Veränderungen ausgelöst, die in weniger turbulenten Zeiten viele Jahre gebraucht hätten, um in Gang zu kommen. Wir glauben, dass unter diesen Umständen erhebliche Werte freigesetzt werden können.
Der globale Corona-Ausbruch in der ersten Hälfte des Jahres 2020 hat die Welt auf den Kopf gestellt. Angesichts dieser Umstände stehen Japans Unternehmen vor der Herausforderung, sich an die „neue Normalität“ anzupassen.
Trotz erheblicher Verbesserungen in den vergangenen zwei Jahrzehnten werden einige Kritiker den Fortschritt der Wirtschaftsreformen in Japan stets in Zweifel ziehen.
Internet-Unternehmen haben sich im bisherigen Jahresverlauf gut entwickelt und den breiteren Markt dramatisch übertroffen. Wir glauben, dass diese Firmen angesichts der überragenden Rolle, die sie in einer Zeit nach Corona wahrscheinlich spielen werden, Potenzial für weiteres Wachstum haben.
Genug Unterschiede zwischen den Abenomics und der vom wahrscheinlich neuen Premierminister Suga vorgeschlagenen Wirtschaftspolitik scheint es nicht zu geben, um das völlig neue Etikett „Suganomics” zu rechtfertigen, das einige Analysten vorgeschlagen haben.
Es ist ziemlich offensichtlich, dass es sich bei Buffetts Investment nicht nur um ein passives Engagement handelt, da er beabsichtigt, mit diesen Handelsunternehmen zusammenzuarbeiten.
Zahlreiche Medienberichte deuten darauf hin, dass Yoshihide Suga das Rennen um das Amt des nächsten japanischen Premierministers anführt. Die wichtigste Frage dabei ist, ob er ohne große eigene Fraktion nur ein Platzhalter für den neuen Regierungschef sein wird.
Analysten und Wahrsager mögen mit politischen Spekulationen Aufmerksamkeit erregen. Aber dies ist keine belanglose Angelegenheit. Japan stehen sehr wichtige Zeiten bevor. Das Land sollte nicht wieder auf die schiefe Bahn politischer Wechselspiele geraten.
While everyone’s individual experience of this global pandemic has been different, there are many shared experiences that we hope readers will be familiar with. In short, the adaptations we have made as a society have changed the way we live and work. Might these new behaviours give a clue as to what industries and companies will prosper in the years ahead? Well, yes and (likely) no, but at least the task of observing our recent past may help us make sense of the present while giving us a clue about what might be round the corner.
In diesem kurzen Beitrag legen wir unsere Auffassung dar, warum eine eigenständige Allokation in asiatische Anleihen die Anlageergebnisse für Ihr Portfolio erheblich verbessern könnte.
Globale Aktien haben im Jahr 2020 eine wilde Fahrt hinter sich. Der Ausbruch der Corona-Pandemie zwang die globalen Finanzmärkte zunächst in die Knie. Zwischen Februar und März 2020 fiel der S&P 500 um über 33 % (in US-Dollar). Auf den starken Rückgang folgte eine rasche Erholung. Ende Juni hatten die meisten Märkte einen großen Teil ihrer Verluste wieder wettgemacht.
Der Ausbruch der Corona-Pandemie hat zu einer Marktvolatilität geführt, wie man sie seit der globalen Finanzkrise nicht gesehen hat. Auf der ganzen Welt mussten Regierungen Maßnahmen zur Einschränkung der Bewegungsfreiheit ergreifen, um die Ausbreitung des Virus einzudämmen. Dies hat die wirtschaftlichen Aktivitäten stark beeinträchtigt.
Der europäische Markt für Unternehmensanleihen hat seit den Tiefstständen der Spreads im Februar 2020 erhebliche Verluste hinnehmen müssen. Die Kreditspreads von Nicht-Finanzunternehmen haben sich um mehr als 120 Basispunkte (bps) ausgeweitet, die von Anleihen aus dem Finanzbereich stiegen um fast 170 bps (Grafik 1).
Der Ausbruch des neuartigen Coronavirus (Covid-19) hat sich zu einer Pandemie ausgeweitet, die die Aktienmärkte in eine Baisse stürzt, den globalen Personen- und Warenverkehr einschränkt und Regierungen und Zentralbanken vor die gewaltige Aufgabe stellt, ihre Volkswirtschaften durch massive fiskalische Anreize und geldpolitische Lockerung zu stützen.
Die Fusions- und Übernahmeaktivitäten (M&A) japanischer Unternehmen florieren. Seit Beginn der Abenomics im Jahr 2012 hat sich die Zahl der Fusionen und Übernahmen verdoppelt und wird 2019 bei rund 4.000 liegen, so die neuesten Branchendaten.
Die globale Datensphäre, definiert als die Gesamtheit der weltweit erzeugten, erfassten und replizierten Daten, wird in den nächsten Jahren im Zuge der Digitalisierung der globalen Industrien explodieren.