Insights

Investment Insights by our experts and thought leaders

Trump vs. Biden II: what implications could the US election have for sustainable fixed income?

The stage is now set for a Biden versus Trump rematch in November. So, what does this mean for sustainable bonds?

Vietnam seeing a full turnaround in fortunes

We visited Vietnam in February and found that business and economic prospects have turned around completely for the better from a year ago. Interest rates have normalised, and mortgage terms are the most favourable that we have ever seen in Vietnam.

New Zealand Fixed Income Monthly – February 2024

The Reserve Bank of New Zealand (RBNZ) maintained the Official Cash Rate (OCR) at 5.5% at its latest Monetary Policy Committee meeting on 28 February, meaning that New Zealand’s interest rates have now been kept on hold for over nine months. We agree with the RBNZ’s decision to keep the OCR unchanged and feel that most indicators are moving in the central bank’s favour.

Navigating Japan Equities: Monthly Insights from Tokyo (March 2024)

This month we focus on the prospect of Japanese stocks sustaining their upward trajectory after reaching record highs; we also assess how the country’s Q4 GDP contraction sharpens the focus on consumption and wages in 2024.

Nikkei reaches all-time high: five reasons the rally will endure

Despite the Nikkei reaching all-time highs in 2024, Japan is also experiencing a technical recession. Against that backdrop, Japanese Equity Investment Director Junichi Takayama offers five reasons why Japan’s economic resurgence still has ample runway, and why investors should consider increasing their allocation to Japan.

Why we should pay special attention to Japan’s Q4 capex surge

One of Japan’s more recent economic releases made us sit up and take notice. Within the very resilient Q4 capital expenditure figures released this week was one important reinforcing indicator of Japan’s structural recovery, or in the Bank of Japan’s language, its “virtuous circle” of reflation. One near-term positive development for Japan is the very real possibility that the “technical recession” in Japan Q4 GDP (down 0.4% quarter-on-quarter) could be, thanks to unexpectedly strong Q4 capex, revised away.
This is the “swan song” of this report, which comes at an appropriate time because it was always meant to prove to readers that corporate governance, and the overall case for investing in Japanese equities, was sound. Now that the market’s performance and global enthusiasm for Japan has swelled, there is less need for the report, although it is useful to note the continuance of its impressive trend.
We explain how reflationary dynamics underpin the foundations of Japan’s incipient structural recovery and illustrate why we believe the country’s equity comeback should not be written off as another flash-in-the-pan cyclical upturn headed for an eventual return to deflationary dynamics.
The seemingly impossible soft landing on the back of one of the most aggressive monetary tightening cycles in history is looking not just possible, but increasingly probable. US data is coming in stronger and global demand is generally steady with increasing channels of potential upside.

Energy security and Future Quality

Our Future Quality investment philosophy revolves around identifying companies that have pricing power, possess management teams that invest will appropriately, boast strong balance sheets and offer opportunities that are not yet priced in by the market. This approach will remain constant in 2024 although we are also acutely aware of the significant impact energy security will have on global decarbonisation efforts.

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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.