Japanese stocks have been mired in a multi-decade bear market since 1990. Remarkably, Japanese equities had an annual gain of -0.3% between 1990 and 2023. Some of the major reasons for this poor performance was that stocks become extremely expensive at the peak in 1990, companies were less profitable than European and US competitors, deflation was raging, and the currency was also very strong which hurt exports.
Now, we are at the opposite end of the spectrum in many ways. Japanese companies are flush with cash and have low levels of debt. Deflation is no longer a threat, while the Japanese yen has weakened and become quite competitive with other countries. On the aggregate, profit margins have risen from 3% to 5.5% since the early 90s. In turn, Japanese stocks have returned 7.4% annually since 2010.
Another positive development for equities is that activist investors have been successful in unlocking shareholder value on balance sheets. The government is also actively encouraging consolidation within fragmented industries and companies to focus on maximizing shareholder value.
Despite these initiatives, Japanese stocks still remain quite cheap with half of companies trading below book value. Yet, there is some compelling evidence to believe that Japanese stocks have more upsides given this combination of catalysts.
Finsum: Japanese stocks are quite cheap relative to the rest of the world. In addition, there have been quite a few positive developments in recent years in terms of corporate behavior and government policy.
Seems that fixed income’s calling and it might pay to presume it’s not someone hawking insurance.
In 2023, it “has a huge potential” to dispense strong returns, according to Joanna Gallegos, co founder of BondBloxx Investment Management, reported yahoo.com, which carried an article earlier in the year which originally was published on ETFTrends.com. That said, it remains a good idea to be cautious.
Worth investing time in, especially: high yield corporate debt. That’s because they offer high yields and it’s projected by Bond Boxx that corporate defaults, compared to their long term average, will remain lower.
Tormented by hyper interest rate spikes that culminated in spiraling bonds yields, 2022 was one of the worse for fixed income, added money.usnews.com.
It sparked a deep dive of price of fixed income assets, and longer duration issues in particular.
This year? Oh how the page turns. Paul Malloy, head of municipals at Vanguard, said "the 2023 outlook is drastically different than the position we found ourselves in last year,” Indeed, fixed-income investors started 2022 with a near-zero federal funds rate, but are now entering 2023 with a rate of 4%-plus. According to Malloy, the Federal Reserve "front-loaded" much of its policy tightening this cycle and is likely nearing a wrap.
“The fixed income asset class has a huge potential to deliver better performance in 2023,” Gallegos said on CNBC’s “Worldwide Exchange.” “We’re at new rate levels we haven’t seen in over a decade plus, and so, you’re really resetting valuations in a way that are very attractive.”
If your clients are invested in Chinese companies and have a preference for ESG, it may be time for a change in their portfolios. It appears sustainability rules in western countries are at odds with what’s happening in China. While Chinese equities offer strong growth potential, their ESG ratings rank lower than western nations and most emerging markets. For instance, Sustainalytics, a sustainable rating agency owned by Morningstar, downgraded three Chinese big-name tech companies on its watchlist in October. The three stocks, Tencent, Weibo, and Baidu, were moved to the category of “non-compliant with UN principles.” In addition, Hong Kong Watch, a UK-based group that researches investment and human rights issues in China, recently said in a report that “many of the biggest asset management, state pension, and sovereign wealth funds were passively invested in companies allegedly involved in the repression of Uyghur Muslims in China’s Xinjiang region.” The report found three major stock indices provided by MSCI included at least 13 companies that “have allegedly used forced labor or have profited from China’s construction of internment camps and surveillance apparatus in Xinjiang.” Another problem is that Chinese companies are less likely to respond to queries from ESG rating agencies.
Finsum:With ESG investing continuing to gain momentum, it appears that many Chinese companies are at odds with ESG due to censorship and repression in China.
Following two years online, October 28-30, the Esports and Gaming Summit took place again onsite. Organized by Gariath Concepts, the event’s renowned as the largest Gaming Convention in Southeast Asia. “At Globe, we are very happy and excited to be part of ESGS this year. In line with our Game Well Played campaign, we have activities in our booth and throughout the entire ESGS event area that promotes multiple products, experiences, and most of all, opportunities to do good,” said Rina Azcuña-Siongco, head of Globe’s Get Entertained Tribe, during a press conference ahead of the summit.
Yet, all might not be peaches and cream on the ESG front. In recent posts, Kevin LaCroix, an attorney and executive vice president, RT ProExec, indicated ESG has a fundamental flaw: it’s void of definition, leading to what he characterized as “sloppy thinking,” according to dandodiary.com.
These ESG related trepidations are explored in a recent post on the Harvard Law School Forum on Corporate Governance. Leveraging cybersecurity as an example, Douglas Chia of Soundboard Governance LLC, illustrates one of the “biggest flaws” of ESG is “the subjective open-endedness of what counts as E, S, or G.”
Stash…Away we go?
It’s a great way to travel, apparently.
In order to offer a suite of diversified multi asset model portfolios, StashAway, Southeast Asia’s wealth management company, recently joined forces with Blackrock, the largest asset manager in the world, according to crowdfundinsider.com.
The portfolios were forged by Blackrock’s analytics and ETFs. StashAway will be their manager.
General Investing portfolios – through the StashAway app – abets the ability of investors to access diversified, multi asset ETF portfolios. The portfolios are optimized for risk adjusted returns over the long haul. Like a regular smorgasbord, investors have a choice of three different General Investment strategies.
The StashAway supported General Investing portfolios dial in on a dual role: optimizing for long term risk adjusted returns while ensuring the risks are unrelenting. While doing the same, the Responsible Investing portfolio also optimizes for the effect of ESG.
And limited thinking? Ha; not around here. The third General Investing strategy, which is supported by BlackRock, is a new long term investment strategy. Its objective is handing the investor broader diversification.
“We’re excited StashAway’s launching portfolios powered by BlackRock’s analysis,” said Peter Loehnert, BlackRock head of ETFs and Index Investing APAC, according to hubbis.com. The partnership, he continued, will give more investors across Asia access to BlackRock’s insights and investment capabilities via StashAway’s platform. It will offer diversified and liquid ETFs as building blocks for portfolio construction, maximising the value of ETF investing.
With, oh, say, Gilligan’s Island in its crosshairs, it hasn’t exactly been smooth sailing for proponents of investment strategies associated with environmental, social and governance data, according to law.com.
In fact, reems have been put to the old laptop revolving how Russia’s invasion of Ukraine culminated in geopolitical questions related to why Russia received ESG focused funds to begin with. Then what happened? Markets scram south and, in the process, a plethora of large ESG funds got hammered because, stemming from their massive holdings in tech stocks that took a beating, they registered losses worse than those absorbed by benchmarks.
McKinsey & Co. consultants, in a new paper, “Does ESG Really Matter—and Why,” go through a plethora of reasons ESG, of late, drew heavy duty criticism. At the end of day, the current turbulence surrounding its specific components aside. they concluded the underpinnings of ESGs and the adherence of “social licenser to them, way down the road, still will be integral to companies.
Meantime, mark the calendar, because a comeback’s on the docket. The Electronic Sports and Gaming Summit – or ESGs 2022 – recently proclaimed that, in the upcoming event, Riot Games will be a Platinum Exhibitor, according to ungeek.ph.
The event will take place Oct. 28-30 at the SMX Convention Center at the Mall of Asia complex in Pasay City.
Riot Games, of course, is world renowned for delivering gamers the largest, most played esports titles. Eventually, it spawned a gaggle of related media.