Insights

Investment Insights by our experts and thought leaders
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.

New Zealand Fixed Income Monthly – January 2024

Despite continued struggles with inflation in New Zealand and elsewhere, our view is that the RBNZ’s next change to the OCR is likely to be downward, albeit at a later timing than the market has recently been expecting.
The Indian market remains attractive. It has the highest earnings growth in the Asian region, valuations that are in the middle of its historic range and an economy that is growing strongly with inflation under control.

New Zealand Equity Monthly –January 2024

We view 2024 with optimism—markets could begin to be driven by company earnings rather than by inflation outcomes and interest rate expectations as they have in the past year, and New Zealand’s market is well placed to shrug off volatility experienced in 2023.
We expect an anticipated decrease in developed market bond yields, coupled with enhanced foreign inflows, to bolster demand for Asian bonds. We see Asia credit remaining well supported with subdued net new supply as issuers continue to access cheaper onshore funding.

Unlocking fixed income biodiversity opportunities: NWB Bank

While bond issuers have embraced the opportunity to help fund the transition toward carbon neutrality, the issuance of nature and biodiversity-related bonds remains more limited. However, biodiversity bond issuance is beginning to move from niche to mainstream.

The Future Quality approach to navigating the AI arms race

The emergence of AI has dramatically shifted the future pathway for the technology sector, and our research has found that this emerging structural trend chimes with our Future Quality principles.

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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.