Global Market Views Update: Japan And Latin America
In Business Monitor Online today, we provide an update of two of our asset class strategies, and our reasoning behind them. Below, we publish short excerpts from each article.
Japan: Under almost all scenarios we can envisage, Japanese equities look set to outperform government bonds over the medium term, particularly in risk-adjusted terms, with the former extremely cheap from an historical perspective and the latter extremely expensive. Our longer-term outlook for the yen, meanwhile, is bearish, based on the current valuation and what we see as an increasingly accommodative central bank, as highlighted by the recent expansion of its quantitative easing programme. A weaker yen should also support our equities over bonds call.
Latin America: We are amending our Latin American asset class strategy this month, primarily because the appreciatory run in the region’s currencies played out better than we had initially expected. At the start of the year, we named the Mexican peso, Brazilian real and Colombian peso as three currencies we liked most against the US dollar over a medium-term time horizon, and the Argentine peso the currency we liked the least (see our online service, January 5, 2012, ‘Latin America Asset Class Strategy’). Since then our three favourites have outperformed all other regional currencies, while the Argentine peso is the only currency that has weakened against the greenback over the same period.