Europe

Investment Insights by our experts and thought leaders

Developed Markets Outlook 2019

Shakespeare once said, “present fears are less than horrible imaginings.” As we come to the close of 2018, we have observed equity markets turn double-digit returns to losses, an aggressive rise in interest rates and a modest increase on the perception of escalating tensions surrounding the world’s two largest economies.

Emerging Markets Outlook 2019

In addition, we have to consider the eventuality of a prolonged trade war. But China would be able to mitigate its impact initially via a combination of monetary and fiscal stimulus, helping offset the impact of tariffs to a certain extent.

Global Investment Committee Outlook 2019: Tempered Positive View

So many developments have occurred since we last met in September, but the major ones were the surprising collapse in oil prices mostly due to geopolitical factors, the U.S.-China trade and BREXIT conflicts becoming increasingly intractable, and that aspects of the global economy showed occasional signs of moderation.

Erdogan Takes It All

In the past few years, Turkey has faced some of the most monumental challenges in its recent history.

Happy Birthday ECB

The ECB recently celebrated its 20-year anniversary and instead of a birthday cake, DB research released a compelling chart about how different asset classes have performed over this time period.

Global Ramifications of the Eurozone’s Huge Trade Surplus

Many economists and currency analysts, after years of ignoring such “old fashioned” indicators, are now talking about the massive trade surplus that the Eurozone enjoys with the world, but in particular with the US.

Italian Elections: More of the Same Political Dysfunction

Poor economic and fiscal policies are, and will likely be, a recurring theme in Italian politics. However, from a trade perspective, we see Italy to remain a good carry/spread trade for at least the next twelve months against a backdrop of improving GDP growth in 2018 and 2019.

Uncertainty in Germany – What are the options?

Even as the situation in Germany to form a new government is difficult, financial markets have reacted very mildly to the uncertainties.

May's Position in Question?

We think it is unlikely that May will be replaced within her own party. This is because there is a lack of an heir-apparent, and the Conservative Party would be extremely reluctant to even slightly increase the risk of another election.

Germany's Election Results – What now?

Despite the uncertainty surrounding the time it will take before the formation of a new government, we do not think there is risk of major policy change in Germany. The election outcome, however, will likely weigh on the aspirations of France’s Macron for deeper Eurozone integration.

Germany's Election Should Be Supportive

Our London-based Global Credit Portfolio Manager lays out the scenarios of the upcoming German election and its ramifications for select German credits.

Forbes: Bank Bailouts And Italian GDP Changed Draghi's View?

“ECB rhetoric might waver back and forth, but unless there is a global downturn or a major political revolution in Italy, its monetary policy will become less accommodative...”

John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com

The Global Investment Committee remains moderately optimistic about the global economy and equity markets, while being cautious on global bonds.

June Gamble Doesn't Pay Off for May

Theresa May’s Conservative Party lost its outright majority in last Thursday’s general election. What are the implications for Brexit and the markets?

View on the French Elections

Our team of our Portfolio Managers in London, one of whom hails from France, reviews the prospects and ramifications of this weekend's French election.

Turkey on a Knife's Edge

Our London-based expert on Turkey updates his views on the precarious situation there.

House View: Bullish on Global Equities and the USD in 2017

Nikko AM's Global Investment Committee's 2017 Outlook — More Economic and Equity Reflation, Despite Less Dovish Central Banks

Italian Referendum: Nikko AM Europe Fixed Income Commentary

We expect Italian assets to underperform until it becomes clear who will be able to form and lead a new government. Nevertheless the outcome of the referendum was already priced into financial markets.

Earnings recovery is much more achievable in EM Asia than LatAm or EMEA

Our Multi-Asset portfolio manager based in Singapore reviews the prospects for profit margin expansion in the three main Emerging Market regions.

Will Japan Exit the UK?

Our UK expert on BREXIT and our chief global strategist respond to Japan’s concern about its investments in the UK.

Erdogan Hammers the Parallel State

Our expert on Turkey details his cautious stance on Turkey's near-term future.

What does Brexit mean for Emerging Markets?

Following our analysis of the recent UK vote, our Emerging Market debt team in London discusses Brexit's potential ramifications for this asset class.

BREXIT, BREXIT! Where’s The Exit?

Two of our senior portfolio managers in London update their earlier pieces on what lies ahead for what should be a long-drawn out BREXIT path.

Slowdown but No Global Recession, with EU Cohesion, but Struggling UK

Nikko Asset Management's Global Investment Committee’s post-BREXIT scenario, including market and economic targets, is on the moderately gloomy side.

Brexit: Outlook for Global Fixed Income & Credit

Uncertainty after Brexit vote, but the correction in valuations and market volatility could provide buying opportunities in some fundamentally strong credits.

Brexit: Where to now for markets?

Although it is still too early to determine the full implications of Brexit over the longer term, in the short term, we can expect significant market volatility as uncertainty prevails, but this does not mean that investors should panic.

Brexit: In or Out? The Final Run In.

Two of our senior portfolio managers in London update their earlier piece on BREXIT with numerous points of great interest on this crucial topic.

Fed rate rise most likely in September, but could be delayed until 2017

Our global rates and currencies strategist in Australia lays out his dovish Fed scenario as an alternative to our house view. In it, he expects the Fed to wait until September or later to raise rates, and states his case that the Fed’s actions do not affect US bond yields.

EU Refugee Crisis: European Weak Points and Outlook

Our London-based portfolio manager, Simon Down, and his colleagues review the refugee crisis that is turning European politics into a "hornets' nest."

Global Credit Outlook

For the next 12 months, we are quite positive on performance prospect for global credit, singling out five investment themes.

G-3 and Chinese Economies Moderately Firmer in 2016

Nikko Asset Management's Global Investment Committee met on March 29th and updated our intermediate-term house view on the global economic backdrop, central bank policies, financial markets and investment strategy advice.

Fed in June and December, but ECB or BOJ Slight Easing

We expect June and December Fed hikes, but only mild further easing ahead for the BOJ and ECB. Meanwhile, we expect oil prices to creep higher through 2016 despite the stronger USD due to relatively firm economic developments in China and the G-3.

We expect that global equity and bond investing will be positive for Yen based investors due to Yen weakness, but for USD based investors, we are taking only a neutral stance on global equities due to a cautious forecast for US equities, whereas we are positive on Asia-Pac ex Japan, Japan and Europe. Meanwhile, we are moderately negative on bonds in each region when measured in USD terms, so we underweight them.

Scones or Croissants? Brexit: The Route to Exit and Key Risks

Although the current polls do not indicate a clear majority outcome, in this piece we will examine some of the issues that may cause sentiment to shift towards a Brexit, and what the UK leaving the European Union might mean for the UK and EU economies post breakup.

Our Global Credit Strategy: Seeking Services

Our Global Credit staff in London detail their rationale behind concentrating on service sector exposure globally.

Global equities: Structural re-pricing occurring or just volatility?

Our global equities team in Edinburgh explains their views on the prospects for their asset class.

Is Saudi Arabia Finally Winning the Global Oil War?

Our London and US analysts review oil prices from the supply and demand angle and they note that global demand growth remains high while global supply is narrowing, indicating that oilfs price swoon could be over.

US & China Economies Sturdy in 2016; So-So for EZ and Japan

Nikko Asset Management's Global Investment Committee met on December 8th and updated our intermediate-term house view on the global economic backdrop, central bank policies, financial markets and investment strategy advice.

Fed Normalization, but not ECB or BOJ

We only expect mild further easing ahead, especially as the ECB does not wish to cause a rupture while the Fed is hiking rates.

We forecast that Asia Pac ex Japan, Japan and Europe will outperform in the next six months, while the US should underperform and, thus, deserve an underweight stance vs. all other regions.

Did ECB QE Jump-start Eurozone Earnings Like the US Experience?

We update our views on whether ECB QE has had a positive effect on corporate earnings.

What Investment Themes Will Drive Credit Markets?

What Investment Themes Will Drive Credit Markets?

A better supply/demand balance in Europe, outperformance of “high yield“ globally, positive event-risk in the telecom sector and opportunities in local currencies, as well as other credit related investment themes, all present interesting opportunities for generating positive returns, even in a challenging environment.

Valuation in a Post-QE World

Markets and economies are still being dictated to by unprecedented levels of monetary stimulus. We believe in building a portfolio of companies that are more likely to flourish in the growth environment beyond 2015.

Greece: the Potential Victory from this Defeat

Like many countries that have previously refused to reform at all levels, sometimes it takes a true crisis to change.

Greek referendum will cause short-term volatility but unlikely to have long-term global market impact

We expect short-term volatility but the threat of financial contagion via the banking system in Europe is much lower than in 2011/12 and we’re unlikely to see a severe longer-term impact on global markets.

Does the price action of bunds signal an end to ultra low rates?

We do not expect the recent steepening of the bund yield curve to be the beginning of a sustained new trend. Moreover, Eurozone and German economic data, albeit improving, are not sufficient to support the higher bund yields on a sustained basis.

G-3 Economies Should Rebound Nicely

In sum, there certainly are some worrisome issues, as always, but we find none of them convincing enough to prevent moderate increases in equity prices.

Central Bank, Inflation, Currency, Commodity and Bond Forecasts

Central Banks: Despite firm economic growth, we believe that a negative YoY CPI through September will steady the Fed's hand.

Regional Equity and Asset Class Forecasts

Coupled with our expectation for global bond yields to rise moderately, we maintain our overweight view on global equities vs. bonds.

European Property: Does it Signal Global Deflation?

Through 2014, one of the largest asset classes in the world was virtually unnoticed as an indicator that Europe is not pushing the global economy into widespread deflation.

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