We believe that Abenomics is working, however we feel that its success cannot be determined by viewing government policy frameworks in isolation.
“Any major crisis in the Northeast Asian region, especially one involving a crisis within Japan’s borders, is likely to be handled very aggressively by the Bank of Japan (BOJ), with it bending the rule-book as much as the Fed did during the Global Financial Crisis or as the ECB has done in the past five years.”
John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com
Our Tokyo Fixed Income team explains its view on the Japanese labor market and its effect on consumer inflation and Bank of Japan policy.
During the 2016 December quarter, we witnessed the value style stage a partial recovery after having underperformed for at least two years or so. Is this as good as it gets? Or will value continue to outperform after its initial recovery, after having being in the wilderness for some time?
China started 2017 with real momentum, following the property driven debt-fuelled stimulus of last year, and the blue skies a result of Government directives to curb pollution during March’s Central Government meetings. However, with an expectation of lower steel intensity sectors driving growth this year, what will this mean for Australia’s resource sector?
MSCI Asia ex Japan (AxJ) was up 3.3% in USD terms, outperforming MSCI AC World. All Asian markets rose over the month, with gains led by India and Korea.
As commodity prices have risen, the Australian economy is set to benefit from these continuing gains.
US Treasury (UST) yields rose in the first half of the month buoyed by hawkish comments from the Federal Reserve (Fed), a solid US jobs report and possible scale back of quantitative easing (QE) by the European Central Bank (ECB).
China has had a significant impact on the supply side in two key global commodities during 2016. Going forward, look out for further actions from China on the supply side of commodities.
MSCI Asia ex Japan (AxJ) was up 3.4% in USD terms, marginally outperforming MSCI AC World. Absolute returns were positive for all AxJ markets except the Philippines.
US Treasury (UST) yields traded in a tight range in February. Risk assets rallied and UST yields rose in the first half of the month, on the back of the prospect of tax cuts and a Dodd-Frank overhaul in the US.
Given the release of the fourth quarter data, we update our decade-long theme about improving corporate governance in Japan.
Asia’s Credit market has come a long way since the Asian Financial Crisis of 1998, having evolved into a large, deep and liquid market.
Asia ex-Japan (AxJ) equities returned 6.2% in US Dollar (USD) terms, outperforming MSCI World. Singapore, Hong Kong and Chinese equities outperformed while Indonesia, Malaysia and Thailand lagged.
US Treasury (UST) yields ended higher in January as weaker-than-expected payroll data led markets to moderate their forecasts for Federal Reserve (Fed) rate hikes in 2017.
Given the challenges, why bother?
In-depth report: Economic growth in Asia is expected to remain broadly stable in 2017. While there will be greater external uncertainties as well as country-specific challenges, Asian economies are, on balance, better equipped to deal with external pressures compared to a few years back.
Asia ex-Japan (AxJ) equities returned -2.0% in US Dollar (USD) terms, underperforming MSCI World and MSCI Emerging Markets (EM). Currencies across AxJ generally weakened against the dollar following the Federal Reserve's (Fed’s) decision to hike rates.
USTs weakened further in December, as caution prevailed following the November sell-off. As widely expected, the US Federal Reserve (Fed) raised interest rates by 25 basis points (bps).
As we start 2017, we expect the continued recovery in Japan’s economy will be driven by three factors outlined in this article.
Trump certainly is non-conventional, in many ways similar to Teddy Roosevelt. Hopefully, Japan can adapt to this new reality, and instead of blocking Trump's initiatives, be able to have acceptable compromise “deals” ready.
Nikko AM's Global Investment Committee's 2017 Outlook — More Economic and Equity Reflation, Despite Less Dovish Central Banks
We believe that in an increasingly uncertain world, Japan’s less uncertain market will provide a compelling opportunity for serious investors.
The phrase “lower for longer” could well become unfashionable very quickly after years of central banks combating the forces of deflation and wishing for inflation instead.
Asia ex-Japan equities returned -2.9% in US Dollar (USD) terms, underperforming MSCI World.