Multi-Asset

Investment Insights by our experts and thought leaders

After depreciating for over 18 months, the US dollar has managed to make a comeback, recouping its 5% YTD loss in a matter of weeks. Coupled with 10 year US Treasury (UST) yields hovering around 3%, this has put pressure on Emerging Markets (EM).

As much as we would prefer to discuss market fundamentals over the trials and tribulations of the current US Administration, it has been largely unavoidable in this first quarter of 2018.

Markets continue to come to terms with the return of higher volatility, triggered ostensibly by fears of inflation and the unwinding of highly leveraged short volatility positions at the beginning of last month.

In our 2018 outlook, we made the case for rising volatility as central banks across the developed world slowly remove the stimulus punch bowl, but few would have imagined volatility spiking with such a vengeance as it did in recent weeks.

Over the past few years, one of the main risks that concerned our team was the possibility that asset classes could become positively correlated.

Could this be taper tantrum 2.0? Markets are well-conditioned to buy risk on the back of generally dovish encouragement by central bankers, but what are we to make of this new seemingly coordinated hawkish tone across the developed world?

Emerging Divergence as Unwinding of QE Gathers Pace

What is the prognosis for Emerging Markets as major global central banks begin to tighten policy?

What does it mean to be a value investor? This question is all the more relevant today. The S&P 500, NASDAQ and Dow have all hit record highs as of the time of writing.

Macron is the next President of France – finally, a win for the establishment. Macron took 66% of the votes over Le Pen’s 33%, but is this a mandate against populism?

With Donald Trump’s victory in the US presidential elections inNovember 2016, the Republican Party succeeded in consolidating control over the White House, the Senate and the House of Representatives.

Mispricing of Volatility in a Post QE World

Is Volatility too low and what re-pricing could mean for various asset markets

The Trump reflation trade may have lost some of its shine during the quarter, but any disappointment was more than overshadowed by strong global data as exports and production continued to gather pace.

In the continuing aftermath of the US Presidential elections, it is easy to overlook the many other macro-political events that made 2016 such an exceptional year.

Global Multi-Asset Market Outlook 2017

2016 may best be remembered as the year in which Trump won and the world changed. The question becomes which reforms will take centre stage.

Donald Trump has won and the world has changed. A real estate developer cum reality TV star will soon be the leader of the free world.

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.

Emerging markets (EM) have endured strong adjustments in commodities and currencies that coupled with reforms makes a good case for better growth ahead.

As we enter the final quarter of 2016, concerns around political risk are at an uncomfortable level. October saw further volatility in the UK Pound, as negotiations around Brexit drove the currency to its lowest level in over 30 years.

Since the 2008 financial crisis, markets have become accustomed to central banks calling the shots. Investors eagerly await each central bank meeting in the hope some new form of monetary policy chicanery can help propel markets higher.

Another summer has passed in the northern hemisphere and any Brexit-related jitters appear a distant memory. Global equities have rallied almost 10% since the June lows, with most markets now in positive territory for the year.

We generally refrain from quoting external sources, but found the strength of this statement compelling. Calling an end to a 35-year long bull market is incredibly bold and we are unsure if it will prove to be right or wrong.

Abenomics hasn't failed yet, but it does face global headwinds

Many are wondering if it's time to give up on Abenomics. While some of the scepticism is understandable, we believe it is too early to throw in the towel.

TWe have been concerned for some time that the disillusioned middle class would eventually rail against the existing establishment and the set of policies they feel are responsible for leaving them behind.

The UK's late June vote in favour of 'Brexit' was initially read as a deep negative, particularly given that markets were priced strongly in favour of a 'Remain' vote. However, after brief reflection, markets outside the region saw a rally, with risk asset performance more than making up for Brexit losses.

We have previously written about our concern that monetary policy is reaching the limits of its effectiveness, particularly when considering zero and negative interest rate policies (ZIRP & NIRP) and quantitative easing (QE).

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 has been certified as carbon neutral for the first time, after entering into a carbon offset programme with the UK-based international organisation Carbon Footprint Ltd.

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