Perspectives Blog

Corporate governance – The next catalyst for Japanese equities

Daisuke Nomoto, Senior Portfolio Manager | August 4, 2014

Overhauling corporate governance to harness the power of private enterprise is critical to Japan’s growth strategy. Better engagement between corporate management and shareholders should ultimately lead to higher returns for holders of Japanese equities. We are focused on companies that can generate sustainable free cash flow, earn returns well above their cost of capital and regularly conduct shareholder friendly capital management. A critica…

Is Europe heading for Japanese-style deflation?

Martin Harvey, Fund Manager, Threadneedle International Ltd | August 4, 2014

…measures across the eurozone has heightened fears of a spiral into deflation akin to that which has blighted the Japanese economy for the past 20 years. In this article, we will assess these differences as well as the parallels in order to gauge the extent of the risk and potential implications for markets. The Japanese experience In order to find the ultimate source of the Japanese deflation spiral, one must go back to the asset bubble of the 19…

Finding opportunity in Japan’s recovery

Robert McConnaughey, Director of Global Research | September 29, 2014

…llocation towards riskier assets from the national pension funds and insurers would create very large inflows to Japanese equity markets. I travelled to Tokyo in the last couple weeks to get a read on the progress of Abenomics and Japanese recovery. After 20 years of malaise, the country is working to shake off the dust and reassert itself on the global stage. But given the challenges they face, it is not a simple path. At every turn, there was…

Should investors be cheering Japan’s new stimulus program?

Daisuke Nomoto, Senior Portfolio Manager | November 3, 2014

…n bonds/equities away from domestic bonds. The near term risk/return profile currently looks very attractive for Japanese equities. With concerns about the effects of the U.S Federal ending QE and global growth slowing, investors around the world wondered where the next positive market catalyst would come from. The answer came quickly from Tokyo. Last week, global stock markets rallied on two announcements that could materially impact Japan’s ca…

Does Japan’s sell-off present buying opportunities?

Daisuke Nomoto, Senior Portfolio Manager | February 10, 2014

What’s behind the Japanese stock market’s recent correction? What’s ahead for Japan’s stock market, currency and government policy? Why the risk/reward tradeoff looks attractive at current price levels Abenomics has already had a bigger impact on the Japanese economy and financial assets than the failed attempt at quantitative easing between 2001 and 2006 (see chart). Inflation has moved back into positive territory, and household income is ri…

October — It always seems to happen in October!

Ted Truscott, CEO, Global Asset Management | October 20, 2014

…the financial crisis erupted over six years ago. In fact, most of the world (especially Europe) looks more like Japan than we would care to admit. Japan is in its third decade of anemic economic growth, disinflation and, in some areas of the economy, outright deflation. Japan’s own financial bubble popped in 1989, unleashing a powerful period of deleveraging that has hindered growth and was further exacerbated by poor policy choices and belated…

Asset allocation: Q4 equity strategy

Columbia Management Global Asset Allocation Team, | October 27, 2014

…heads toward the exit, the European Central Bank is planning to provide further monetary easing and the Bank of Japan is continuing to expand its balance sheet. We are neutral on the eurozone, overweight Japan, neutral on overall EM equities favoring Asia over Latin America and maintaining a small overweight to EMEA. In August, we cut our recommended equity weight to neutral. This reduction in portfolio risk responded to the currency volatility…