InvestorDaily reported in March that the asset manager had reduced its overweight stance on global equities to neutral due to the volatile geopolitical situation in eastern Ukraine and negative news from China.
Speaking at a recent conference, Nikko chief global economist John F Vail said the geopolitical concerns harboured by the company in March have now stabilised, with the company expecting a further rise in global equity markets.
“We’re looking for about a six per cent return in US dollar terms over the next six months through to December,” said Mr Vail.
“It’s pretty evenly split, so we haven’t made any large geographical overweights or underweights except for the fact we’re actually quite positive on Hong Kong over the next six months and we’re pretty cautious on Australia.”
Mr Vail said the Australian economy is likely to be hurt by the slowdown in China’s economy and will not be helped by China’s economic reforms since they will not benefit commodity prices.
“We’re not negative on Australia but we’re definitely not positive – it’s basically going to be flat the next six months,” he said.
Mr Vail said the US economy is strongly bouncing back from the tough winter, with “consumer spending, capital expenditure and housing construction leading the way”.
“As for the eurozone, conditions were a bit unstable in the first quarter but should improve going forward,” he said.
Mr Vail said Japan’s economy continues to follow its expectations fairly closely, but the asset manager still considers growth to be “understated by falling inventories and other unusual factors”.
Major geopolitical issues still remain, such as the Ukraine and Iraq, but Nikko expects that these will stabilise, he added.
“Even though there are still some hot spots, on their own they’re not likely to derail steady global growth,” Mr Vail said.
