No, we do not expect Japanese mid-/large-cap equities to outperform their global peers despite some supportive factors, such as Tokyo Stock Exchange (TSE) reforms and inflows from security investment schemes. Japanese equities tend to underperform in global activity slowdowns and contractions, and current valuations do not offer sufficient compensation to bear that risk, given our […]
October 2024
Introduction Aaron Costello, Regional Head for Asia, and Vivian Gan, Associate Investment Director, Capital Markets Research With the global economy showing signs of cooling and Chinese economic momentum remaining weak, the outlook for Asian markets is increasingly mixed. Certain markets have been more resilient, such as India, where domestic growth is still robust, and Taiwan, […]
September 2024
Yes, investors should diversify in a risk-controlled manner, as mega-cap tech stocks have delivered exceptional fundamentals but are expensive and represent an outsized share of the equity markets. Investors should diversify concentration risk by leaning into more attractively valued segments of the market, namely developed markets small-cap and value stocks. Over the last 15 years, […]
September 2024
No, Federal Reserve rate cuts alone are unlikely to trigger sustained outperformance for Chinese equities. While the start of Fed rate cuts may help support the RMB and allow the People’s Bank of China (PBOC) to modestly ease monetary policy, it is unlikely to reaccelerate China’s economy and ease current deflationary pressures, both of which […]
August 2024
Yes. Emerging markets (EM) equities provide a fitting reminder that relative performance among asset classes varies over time, suggesting that investors maintain well-diversified portfolios to weather shifts in performance cycles. Neither the widespread underperformance of EM equities since the Global Financial Crisis (GFC)—nor a sustained period of EM outperformance—are without precedent. We are neutral on […]
August 2024
No, not right now. We continue to believe investors should: (1) keep equity allocations aligned with broad policy targets; (2) maintain modest overweights in less expensive areas within equities, such as developed markets value and small caps; and (3) maintain a modest overweight in long US Treasury securities within bond portfolios. The potential for continued […]
August 2024
The Labour Party secured a sweeping victory in the UK general election, returning them to power for the first time since 2010. Although Labour’s share of the vote increased only slightly since 2019 to 34%, the Conservative’s loss of votes to Reform allowed Labour to win 412 of the country’s 650-seat parliament. Even so, we […]
July 2024
Yes, we believe it will. Excitement around artificial intelligence (AI) and its related technological advancements has been a key market driver since early 2023. Investors are rightly enthusiastic about the potential for AI to support labor productivity and growth. We share this enthusiasm, while acknowledging the uncertainty in quantifying these benefits. Despite AI’s long-run promise, […]
June 2024