Equity

Investment Insights by our experts and thought leaders

Asian equity markets rose marginally in May, boosted by Shanghai’s plan to lift COVID-19 restrictions, even as the US Federal Reserve raised its benchmark overnight interest rate by 50 basis points. For the month, the MSCI AC Asia ex Japan Index rose by 0.5% in US dollar terms.

Asian markets were downcast in April as investors were concerned about inflation and the likelihood of a larger-than-expected rate hike by the US Federal Reserve. For the month, the MSCI AC Asia ex Japan Index fell by 5.2% in US dollar (USD) terms.

New Zealand Fixed Income Monthly – April 2022

It has still been a tough year so far for New Zealand bonds amid pressure from inflation. That said, the market in New Zealand has been an outperformer among global peers since the beginning of 2022.

New Zealand Equity Monthly – April 2022

This month we turn our focus to developments in China and their impact on New Zealand companies. New Zealand’s trade with China expanded by 22% in 2021 despite COVID-19 having an impact throughout the year. This highlights the incredible growth seen in trade between the two countries over the years.

Navigating Japan Equities: Monthly Insights from Tokyo (May 2022)

We discuss the implications of the weak yen, now considered by some as a menace rather than a blessing, for the Japanese market and economy. We also explain the potential impact of higher energy and commodity prices.

Ground-level observations from China

A trip back to China provided an opportunity to experience first-hand the impact innovative technology and digitalisation is having on a fast-changing urban society.

Global Equity Quarterly (Q1 2022)

We are keen to participate in the push towards a less carbon intensive future but want to do so in a balanced fashion, with one eye on the associated risks.

New Zealand Fixed Income Monthly – March 2022

The New Zealand bond market has experienced a rough start to 2022. The chief driving market factor has been the upward movement in reference interest rates, with the swap and government curves all moving up as central banks turn hawkish to fight inflation for the first time in a generation.

New Zealand Equity Monthly – March 2022

This month we focus on A-REITs, which are larger and more liquid relative to their New Zealand peers. One of the sector’s benefits over its New Zealand counterpart is its simple numerical advantage: Australia boasts 34 REITs, which is three times the number of REITs in New Zealand.

New Zealand Fixed Income Monthly – February 2022

We think the New Zealand bond market looks very attractive relative to the rest of the world given how high our interest rates are. At the same time, we certainty aren’t immune to developments in the rest of the world, particularly the US, where the Federal Reserve is poised to begin raising rates.

New Zealand Equity Monthly – February 2022

The New Zealand market recovered well from the global plunge in equities seen in response to Russia’s invasion of Ukraine on 24 February. The current events in Europe have had very little immediate impact on New Zealand, particularly from a corporate earnings perspective.

New Zealand Fixed Income Monthly – January 2022

Inflation is creating challenges for the New Zealand bond market and economy. In line with bond markets around the world, New Zealand’s market has had a difficult start to 2022. Bond yields and interest rates in general have been climbing as central banks hike rates to tackle soaring inflation.

New Zealand Equity Monthly – January 2022

We see the volatility in the New Zealand markets as an opportunity to focus on new companies for which we have a high degree of confidence in their earnings.

India: Reaping growth from change

Going back to India for a month after two long years of not being able to visit my family, I was pleasantly surprised by the new normal. While there has been much adversity, COVID-19 has also sparked positive change, especially on technology adoption.

Global Equity Quarterly (Q4 2021)

An ability to look forward to better times and remain optimistic is invaluable. These attributes are no less helpful when investing in equities. Whilst you can get an unpleasant surprise from misjudging the direction of the tide while enjoying your picnic, the consequences for misjudging the direction of the liquidity waves look more pronounced than ever as we enter 2022.

New Zealand Fixed Income Monthly - November 2021

New Zealand faces the same kind of uncertainties other countries are confronting due to the global pandemic. But New Zealand, in some ways, has been in the vanguard of recovery from the COVID-19 outbreak.

New Zealand Equity Monthly – November 2021

COP26 included a pledge by New Zealand and 100 other countries to achieve 30% cuts in methane emissions by 2030. Similar progress is being seen in the area of corporate disclosure as New Zealand is set to have its first climate-related disclosure standard by the end of next year.

2022 Asian Equity Outlook: Well positioned to navigate tightening

We believe that Asian economies are well positioned to navigate monetary tightening in the US. Government finances are healthier, as are corporate balance sheets. Most Asian economies are digitising faster than their western peers, while consumption is set to receive a meaningful boost from economic reopening.

The initial discovery of the Omicron variant was met with fairly sensational reporting by some of the world’s media and this fed through quickly into investor sentiment. It is probably true, however, that even if Omicron had not surfaced it was probably about time that investors were again reminded of the volatility that resides in markets, despite the mollifying impact of endless liquidity injections by central banks.

2022 Japan Equity Outlook: ESG to bring Japan to the fore

ESG initiatives are expected to become ever more important for companies and investors around the world in 2022. We expect many Japanese companies to come to the fore amid this global shift towards ESG, with enhancements in ESG disclosures shedding light on their value creation opportunities amid the current drive towards decarbonisation.

2022 Singapore Equity Outlook: Focusing on sustainable growth

The Singapore economy is on a road to recovery. Although the economy has already rebounded sharply in 2021, we expect the recovery theme to remain intact and continue supporting the Singapore economy in 2022. We see a broadening of growth within Singapore’s key economic engines in 2022, with a sharper recovery expected in the services sector as the economy reopens.

2022 China Equity Outlook: Focusing on new market leaders

Amid a flurry of headlines, investors may have largely overlooked the significant number of recent positive developments in China, such as initiatives directed towards ambitious renewables targets, the continued opening up of the financial sectors and support for a significant number of industries including AI and big data. We believe these areas could become the new leaders of China’s capital markets, representing investment themes for the next several decades.

New Zealand Fixed Income Monthly - October 2021

October was a tough month for the New Zealand bond market with yields rising in anticipation of further increases in cash rates and in response to global markets bracing for the possibility of central banks reducing stimulus by tapering bond purchases.

New Zealand Equity Monthly – October 2021

The New Zealand stock market has been flat in the calendar year to date, with companies working to adapt to a number of risk factors. This puts it in stark contrast with markets in the rest of the developed world, which have seen gains ranging from 10% to 25%.

Global Equity Quarterly Q3 2021

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.

New Zealand Equity Monthly – September 2021

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.

New Zealand Fixed Income Monthly - September 2021

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.

What can investors expect from a Kishida government?

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.

Funding high-impact climate action with green bonds

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.

Latin America: Supplier to a commodity-hungry world

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.

Staying adaptive to an evolving recovery

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.

New Zealand Equity Monthly – August 2021

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.

New Zealand Fixed Income Monthly - August 2021

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.

New Zealand Equity Monthly - July 2021

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 Fixed Income Monthly - July 2021

New Zealand’s bond market performed well overall in July, although the long term sector outperformed its short term peers significantly.

Global Equity Quarterly Q2 2021

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

Further improving Japan’s equity culture and wealth

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.

New Zealand Fixed Income Monthly - June 2021

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.

New Zealand Equity Monthly - June 2021

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.

New Zealand Fixed Income Monthly - May 2021

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.

New Zealand Equity Monthly - May 2021

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.

Asian Equity Monthly - May 2021

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.

Japan Equity Monthly - May 2021

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.

Asian Equity Monthly – April 2021

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.

Net zero carbon: Is it all just hot air?

"Nowadays people know the price of everything and the value of nothing", quipped Oscar Wilde.

Japan Equity Monthly - April 2021

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.

The case for Asian small caps

Exhibiting an extensive track record of outperformance versus big caps and offering good diversification from traditional equities, we believe that Asian small-cap stocks provide numerous investment merits for long-term investors.

Core markets fixed income quarterly

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 market fixed income quarterly

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.

Global Equity Quarterly Q1 2021

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.

Contact Us

For more information on Nikko Asset Management's UCITS or tailored investment mandates, please contact:

Email: EMEAenquiries@nikkoam.com
Tel: +44 (0) 20 7796 9866

Nikko AM works with the UK-based international organisation Carbon Footprint Ltd. to offset carbon emissions through offset programmes, and has been certified as carbon neutral since 2018.