This is the second quarter in a row the Nikko global investment committee has maintained an overweight stance on global equities after it revised its stance to 'neutral' in March.
Head of the global investment committee John Vail said while there are some concerns about the global economy, “none of them are enough to halt the upside momentum of equity prices”.
“Even rising US interest rates are consensus now, so although there may be volatility as [it] crystallises, it may be no more problematic than the nearly-completed tapering process,” said Mr Vail.
Consumer spending, capital expenditure and housing construction continue to improve in the US, according to Nikko AM’s analysts.
“As for employment, we continue to believe that payrolls will expand at a healthy rate, especially in the housing construction and related services areas,” said Mr Vail.
The rise in car sales was perhaps the strongest sign of growth in the US, he said.
“Retail spending is also solid; new home sales are rebounding; and ex-aircraft durable goods orders have accelerated further in recent months and are surging if you include aircraft,” he added.
Mr Vail said the committee also believes Japan’s recovery is on track.
“Our positive view on inventory building and net exports is likely what sets us apart from consensus, but our forecasts are hardly aggressive and seem completely logical,” he said.
While conditions in Europe were weaker in the second quarter than Nikko AM expected, primarily due to the effects of the Ukraine crisis, Mr Vail said this should improve.
