Nikko Asset Management Bullish On US Dollar, Global Equities

Josh O'Neill

23 December 2016

One of Asia’s largest asset management houses has lifted its view on global equities to overweight and is now bullish on the US dollar following the election of Donald Trump as US president, due to boosted global economy prospects and expectations of a hawkish monetary policy.

’s committee, comprised of senior investment professionals from across the firm’s global network, earlier this week reviewed global economic conditions. The firm oversees a total of $176.5 billion, according to latest published data.

Although there is uncertainty about how Trump’s presidency will pan out, the global investment committee believes his overall goal is clear: to spur investment and create new jobs in the US through lower corporate taxes and decreased regulation. Nikko Asset Management has consequently developed the view that US equities will benefit in the immediate term and has forecasted the S&P 500 to stand at 2,478 at the end of June, and 2,533 by the end of 2017.

Both European and Japanese equities are expected to perform well in local currency terms, the firm said, backed by strong US and global growth, but gains are likely to be limited in US dollar terms.

With regards to currencies, Nikko Asset Management is bullish on the US dollar against the yen and the euro, on the view that the US Federal Reserve will take a more hawkish stance once Trump enters into power. Nikko’s global investment committee forecasted the Federal Reserve to raise interest rates in each of the first three quarters of 2017.

“Although the surprising Trump victory carries many uncertainties, the net effect for global economic growth and corporate profits has clearly improved. This justifies an overweight stance on global equities, particularly for the United States and the Developed Pacific ex-Japan region,” said John Vail, the global investment committee chairman and chief global strategist.