Asia-Pacific set to outperform other markets in next 6 months: Nikko Asset Management

SINGAPORE — As uncertainty clouds equity markets ahead of the upcoming U.S. presidential election, one asset management firm is placing its bets on Asia-Pacific.

“For the most part, yes, we’re quite happy to have risk positions on in Asia-Pacific,” John Vail, chief global strategist at Nikko Asset Management, told CNBC’s “Street Signs Asia” on Tuesday. He said his firm expects “all of Asia-Pacific to outperform in the six months ahead period.”

“We’re not afraid, especially for long-term investors, to have to put positions on now in Asia-Pacific,” Vail said.

For those who are looking to time the markets, the strategist said there will probably be dips — though the timing is “extremely difficult” to determine.

For its part, Vail said Nikko Asset Management’s global investment committee forecasts a win for former Vice President Joe Biden while Congress may be split between Democrats and Republicans. This would result in a “moderate Democratic agenda in the years ahead,” he said.

“That would negatively affect the U.S. market for a while, a quarter or two,” he added, saying that Europe would “struggle for Brexit reasons” while Japan and other developed Asia-Pacific markets “continue to rally further.”

Developed markets in focus

Nikko currently has its eyes on developed markets such as Australia, Hong Kong and Japan, where it sees rating increases and earnings growth, Vail said.

He said China’s recovery could help Australia and Hong Kong.

“Increased tourism, the prevalence of vaccines will all help these economies — especially their tourist economies,” he added.

For Japan, its tech and automobile cycles are both “turning up” and there’s political stability with country’s new “reformist” Prime Minister Yoshihide Suga, the strategist said.

“It’s looking quite good (in Japan) and valuations are quite attractive,” Vail said, adding that the country has been on a “upward trend.”

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