We present our 2022 outlook for core markets, emerging markets and global credit.
Asian stocks fell in November on concerns that the spread of the new Omicron COVID-19 variant could derail global reopening plans and delay economic recoveries.
The global economy should match the consensus for strong growth, thanks to vaccinations, continued fiscal stimulus, acceptable global geopolitical conditions, and continued low interest rates despite increasingly hawkish central banks. Such, via increased corporate profits, should allow equity markets to perform very well ahead, with impressive returns in each region, particularly in Japan.
We assess Japan PM Kishida’s record stimulus package and its potential implications for the pandemic-hit economy; we also gauge what the new political administration could mean for the Japanese capital markets currently undergoing significant changes.
The just released 3Q CY21 data on aggregate corporate profits in Japan was very positive, as although for the single quarter, the overall corporate recurring pre-tax profit margin declined from the 2Q, as it does routinely for this non-seasonally adjusted data.
Just a few weeks ago I attended my first in-person conference since 2019. Over 40,000 people descended upon Lisbon for Web Summit, one of the world’s largest technology conferences. The event brings together CEO’s and founders of established firms together with start-ups and policymakers to discuss and pitch ideas over the course of a week.
Although the late 1980s’ “Lawson Boom” in the UK was an interesting first real-time introduction to a credit boom, the author’s first authentic experience of the “madness” that can accompany a credit boom was centred on Japan in 1988 and 1989.
As the global economy takes steps to recover from the pandemic, prices have steadily risen around the world. Japan, however, remains an exception among the major economies. The country’s headline CPI did tick up in October, but at a very modest pace, showing that inflation is yet to gain strong traction in a country long stuck in deflation.
Every few years, concerns emerge over whether China is investable. We are currently witnessing the latest round of this cycle amid China’s drive to regulate. However, investing in China during such moments of doubt has reaped substantial returns in the past. The key is not missing the forest for the trees when China is regulating in order to innovate.
Asian stocks rose in October, with investors remaining focused on rising inflationary pressures and the US Federal Reserve’s tapering plans. The markets’ key concern is China’s economic performance and its impact on the energy and commodity complexes.
Has economic data really changed so much as to suggest an inflection point on inflation and the growth outlook was near? To some degree perhaps, at least in the eyes of the market, but not enough in the end for central banks to meaningfully change their guidance.
We expect Indonesian bonds to outperform, as demand is supported by positive supply technicals. Meanwhile, we see bonds of low-yielding countries like Singapore, South Korea and Thailand prone to bear flattening, driven mainly by UST movement.
October was a tough month for the New Zealand bond market with yields rising in anticipation of further increases in cash rates and in response to global markets bracing for the possibility of central banks reducing stimulus by tapering bond purchases.
The optimist says prices are cheap. The pessimist says prices are expensive. The central banker says inflation is transitory. We remain in the aftermath of a month where the worldview on the future of monetary policy has dramatically changed.
The New Zealand stock market has been flat in the calendar year to date, with companies working to adapt to a number of risk factors. This puts it in stark contrast with markets in the rest of the developed world, which have seen gains ranging from 10% to 25%.
Japan’s rapidly advancing medical technology is viewed as a way to address the healthcare sector’s inefficiencies while at the same time offering potential value opportunities.
We explain how the recent lower house election win gives Japan’s new prime minister a free hand to pursue policies aimed to help the economy recover from COVID-19. We also analyse why a weaker yen no longer provides as much of a boost to equities.
Although it is often overlooked (perhaps because it is yet another rather inconvenient truth), the simple fact is that the COVID-19 Pandemic and the various Supply Chain Disruptions that have followed it has made most of us poorer.
Our philosophy is centred on the search for “Future Quality” in a company. Future Quality companies are those that we believe will attain and sustain high returns on investment. ESG considerations are integral to Future Quality investing as good companies make for good investment
US Treasury (UST) yields rose in September, with the US Federal Open Market Committee finally alluding to moderate its asset purchases as soon as November. The rise in rates was further supported by an escalating power crunch across Europe and China amid surging energy prices prompting concerns about inflation.