Insights

There’s more to Japan’s renaissance than relatively inexpensive valuations. Companies have become more receptive to corporate reform and shareholder engagement; Japan’s services sector is benefitting from a resumption in tourism; and, in Japan, inflation is settling at supportive levels after years of deflation.

We are currently in the midst of a regime change to a world of slower growth, periodic bouts of inflation and technological transformation. While much of what the future holds is unknowable, such as the impact of artificial intelligence, there are other clear long-term trends that can help guide investors: the path to clean energy, growing healthcare requirements and the re-emergence of the travel industry.

Structural reforms, investments in energy transition, rising consumption and vast improvement in India’s infrastructure, productivity and manufacturing sector are expected to bolster the country’s next phase of economic growth and development.

The climate change crisis we are witnessing presents both challenges and opportunities. Focusing on the latter from an investment perspective, in our view asset managers are in a position to help facilitate society’s goals of reducing GHG emissions and decarbonising.energy

To mark five years since the launch of the Nikko AM ARK Disruptive Innovation Fund, Nikko AM and ARK Invest take a look at the five primary innovation platforms, their achievements over the last five years, and our expectations for them during the next five to ten years.

This month we take a closer look at Japan’s 2Q GDP surge and analyse the factors that could offset a potential slowdown in exports; we also assess why the markets are less perturbed by a weak yen compared to a year ago and discuss the prospects of the currency strengthening in the months ahead.

A changing geopolitical landscape in Asia coupled with a desire to partially diversify away from China-based supply chains is creating opportunities in India and Indonesia.

The just-released 2Q CY23 data on aggregate corporate profits in Japan was somewhat mixed, but the overall corporate recurring pre-tax profit margin rebounded near its record high on a four-quarter average.

The economic wheels continue to turn forward, surprising many given that the Federal Reserve lifted the overnight target rate to 5.5%, a level not seen since 2001. It is also above the top rate of 5.25% seen back in 2006–2007, before rate cuts ultimately failed to prevent the Global Financial Crisis. This time around, balance sheets are much stronger in the private sector and so are regulations. And now, the combined fiscal impulse and investment wave may keep pushing recession risk further away.

Recent data demonstrate that declining demand is now a major concern for companies as recent rate hikes by the Reserve Bank of New Zealand increasingly constrain economic activity.