Insights

Investment Insights by our experts and thought leaders

Sharia bonds: an overlooked diversification opportunity?

Sharia-compliant bonds, or to give them their official name, “sukuk”, are often dismissed as faith-based instruments with limited appeal outside of Muslim-majority markets. However, this misses the opportunity they present for global fixed income investors seeking diversification, resilience, and sustainability.

China's tech sector: the long march to innovation

With slowing growth and an ongoing trade war to handle, China appears to be in a crisis management mode. However, the country is at an inflection point where major structural shifts are occurring as it strives to climb up the technological value chain to achieve self-sufficiency via innovation and resourcefulness.

Global Investment Committee’s outlook: narrowing growth differentials

The GIC assesses that the probability of slower yet positive growth in the US has increased. The GIC anticipates a narrower growth gap between the US and other developed markets, with selective diversification into European and Chinese equities potentially paying off. The GIC believes that the risk premium offered by Japanese equities is now competitive with that of the US, although trade-related uncertainty is expected to linger.
US exceptionalism has faded from view recently, supporting an exodus from US assets. However, our stance remains that the US is core to our investment thesis, allowing us to remain part of the secular growth trend in technology innovation not found elsewhere in the world.
We continue to believe that Asia's local government bonds are positioned to perform decently, supported by accommodative central banks amid an environment of benign inflation and moderating growth.

FOMC: projections highlight heightened uncertainty in rate outlook

The Fed maintained interest rates at its June meeting, signalling a slightly more positive economic outlook. Despite easing of some risks, uncertainties remain elevated, with inflation still a key concern. FOMC members' varied rate projections reflect heightened uncertainty in the economic outlook.

Strategic shift in Japanese equities: uncovering takeover triggers

Japan's corporate governance landscape is continuing to evolve, highlighted by increases in shareholder activism and unsolicited takeover offers. The reforms initiated over the past decade have led to a more open corporate climate, and there is a shift towards a more competitive and value-driven market environment in Japan.

New Zealand Equity Monthly (May 2025)

New Zealand’s climate-related disclosures regime came into effect for reporting periods beginning on or after 1 January 2023 and the first rounds of annual reports were released in 2024. Now that the second year of reporting is underway, we share some of the benefits and challenges we have found in the reporting process.

New Zealand Fixed Income Monthly (May 2025)

The RBNZ's interest rate cut in May was viewed as a hawkish reduction, with the central bank seen moving closer to the point at which it will consider pausing the cycle to observe the benefits the current monetary policy settings can bring to the economy.
Markets, while volatile, have continued to recover, and we are now seeing an easing of trade tensions. However, in these uncertain times, one thing remains clear—uncertainty itself. The situation remains fluid, and against such a background we expect Chinese policy support to stimulate consumption and business activities.

Japan plays the long game to keep structural recovery intact

Japanese equities have not been immune to tariff worries. However, it is worth remembering that Japan is playing the long game: the country is undergoing structural reflation driven by factors unlikely to be reversed by market volatility or bad news on US trade.

Navigating Japan Equities: Monthly Insights From Tokyo (June 2025)

We discuss how growing calls to reduce Japan's consumption tax rate provide a chance to focus on how consumption can be stimulated, potentially triggering a secular change in spending behaviour; we also assess the recent surge in super-long JGB yields and its possible implications for monetary and fiscal policy.

The reckoning of ESG: turning the backlash into opportunity

The backlash against ESG should be seen not as a setback but as a catalyst for progress. By embracing Rational Sustainability and focusing on financial materiality, asset managers can enhance their investment strategies, fulfil their fiduciary duties, and meet the evolving expectations of their clients.
In this month's Balancing Act we review Q1 corporate earnings, which have been more resilient than expected; from a defensive standpoint we also discuss our cautious view on gold.
Against a more challenging but still benign macroeconomic backdrop, we expect Asian corporate and bank credit fundamentals to stay resilient, aside from a few sectors and specific credits which may be affected by tariff threats or geopolitical dynamics.
We can expect more aggressive policy support from Chinese authorities over the next several months for consumption and business activities, prompted by the still uncertain global trade situation. Despite the ongoing volatility and uncertainty surrounding US-China tariff policies, there are encouraging signs that the situation may improve.

We are all Bayesians now: why the US bond market is pivotal

Moody's downgrade of the US offers a chance to assess the relationship between the US administration and the bond market and examine the implications of persistent budget deficits, market reactions, trade tensions and policy decisions.

Active investing: insights from nearly 40 years of experience

Our belief is that there are three key ingredients of success that active managers should deliver to make outperformance more likely: culture, philosophical path and process design.

Global Equity Quarterly (Q1 2025)

We firmly believe that markets remain inefficient, and the last few months are testament to that. Hence we face today's uncertainty level headed, attentive to where risks lie while also inquisitive about the potential opportunities.
Speculation over the actions of the US administration had a major impact on asset markets throughout the January-March quarter, with volatility dominating towards the end. We trimmed our overweight score in growth assets during the quarter, while we kept our view of defensive assets marginally positive.

New Zealand Equity Monthly (April 2025)

The upcoming New Zealand earnings reporting season is set against a backdrop of intricate global economic factors and trade tensions. Amidst the uncertainty, we assess New Zealand's exposure to the global trade tumult, highlighting potential challenges and supportive factors for the country's economy and companies.

New Zealand Fixed Income Monthly (April 2025)

In our view, New Zealand’s status as a safe haven during times of turbulence has often exceeded that of other markets. Although the New Zealand market is relatively small, it also offers a high degree of quality, and the country's bond and asset prices rarely see as much volatility as in the rest of the world.

Trump’s first 100 days: a new economic regime takes shape

With a new economic regime potentially taking shape, we believe that now is an opportune time to consider an active global fixed income approach to navigate what is likely to be a prolonged period of uncertainty.

Navigating Japan Equities: Monthly Insights From Tokyo (May 2025)

While the “tariff crisis” may have clouded Japan’s economic outlook, the prospects are certainly not opaque as it may look to reduce the role of US exports. Trade tensions have also prompted the Bank of Japan to hold monetary policy steady, but the central bank is still seen to be on course to hike interest rates in the longer term as it takes into account the continuous rise in domestic inflation.
One major “plotline” central to the recent series of tariff moves is the tense trade relationship between the US and China. In this issue, we will explore how Chinese bonds have historically offered defensive characteristics and their portfolio roles moving forward.

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.