Photo: Stralem & Co. Wall Street's Oldest Woman has Died
Irene Bergman, Senior Vice President and Financial Advisor at Stralem & Company, Inc., a New York asset management firm founded in 1966, has passed away.
Born in Berlin, Germany on August 2nd, 1915 to a prominent private banker, she started her career in 1942 after arriving as a refugee from Europe. At Stralem & Co, Bergman helped oversee about $1 billion and managed accounts for U.S. and international clients. She joined the company in 1973 from Loeb, Rhoades & Co., where she worked six years as an investment manager in the international department. She previously spent a decade as an assistant manager in Hallgarten & Co.’s foreign department, working on merger arbitrages and writing a weekly market letter.
Bergman stopped going to the office in December 2014 and worked from home until her death. To celebrate her 100th birthday, she was invited to ring the bell at the New York Stock Exchange.
CC-BY-SA-2.0, FlickrPhotos: Florence Low. “You Cannot Invest in Asia Without Properly Knowing the Market.” Matthews Asia’s Message During its Annual Conference
Last 13th to 15th of September, Matthews Asia held its annual conference at the Palace Hotel in San Francisco. The sessions were attended by up to 120 delegates from Canada, the United States, and Latin America.
Delegates heard firsthand about the management company’s experience in long term investing in one of the world’s most dynamic economic regions, which contributes to more than a third of global GDP. This year, the company celebrates its 25th anniversary as one of the most specialized companies in the Asian market.
“Speaking directly with the CEOs, visiting the company, walking through their facilities…” for Paul Matthews, the firm’s founder, and Mark Headley, Chairman of the Board of Directors, that isthe key to the company’s 25 years in the region. “It is still essential to visit the companies in which we invest to get to know them properly,” Headley said during his speech, reminiscing about his first visit at an Asian factory.
“In 1993, Paul and I saw, in a Barings brochure, photos of a textile company, which pictured all its workers busy at their jobs. When we went to visit it, we discovered that their warehouses were completely empty” After a few twists and turns, they finally got someone to explain to them what was happening. The factory was waiting for machinery from Germany, and meanwhile its 3,000 employees could not work. “The fundamental conclusion of that trip was that you could not invest in Asia without personally visiting the companies,” said the Chairman of the Board.
During the two conference days, the company’s portfolio managers emphasized the idea that investing in Asia is a long distance race, and that the best way to ensure returns is by investing strategically, rather than tactically. Matthews Asia does not invest in countries or in certain sectors, but in companies. Their process is entirely bottom-up and the portfolios are constructed company by company.
Investing in China
With regards to China, Matthews’ experts stressed that despite the ‘bad press’ haunting the Asian giant, the reality is that there has just been a slowdown, rather than a collapse of the economy. In fact, the fund managers believe there is an opportunity to invest in companies, especially those related to the strength of domestic consumption in China.
Matthews is convinced that the debt problem in China is not higher than in other world economies, and is mainly composed of public debt. The fact that household debt is not substantial is, in their opinion, an advantage.
The highlight of the first day came from Andy Rothman, a veteran investment strategist and author of the Matthews Asia blog, Sinology. His mission: to destroy the myth of an unrestrained China.
“The average citizen in developed economies imagines China as an economy which is still totally controlled by the state, with a very communist background, ghost towns, “zombie “companies, and with exports and investment accounting for the most part of GDP. The reality of China’s economy is more like this: 80% of employment in China is in private hands, all employment growth is generated by SMEs, it is a market of entrepreneurs and, finally, we are in the fifth consecutive year in which services and consumptionaccount for a larger part of the economy that investment.”
Strategic vs. Tactical
The Matthews Asia Investment Forum also featured a presentation by portfolio managers, Robert Horrocks and Teresa Kong, who reminded the audience that there are not many purely tactical or purely strategic decisions, but that decisions within their company are much more strategic than tactical. This is why, for them, macro data is important but just up to a certain extent.
Matthews Asia defines itself as ‘macro-agnostic’, a description which caught the audience’s attention, and which refers to the fact that it places much more importance on choosing the right companies, than on choosing the right countries.
“Choosing the right company is even more important than choosing the right sector. In fact, issues like interest rates, currencies, and GDP growth, are all more tactical than strategic. When you invest with a 10-year horizon, macro parameters lose relevance,” Kong said during her presentation.
The event closed, until next year, with a visit to the company’s San Francisco office, providing delegates with the opportunity to have one-to-one meetings with fund portfolio managers.
CC-BY-SA-2.0, FlickrPhoto: greeblie
. Baby Boomers Are the Largest Users of ETFs
Despite the commonly held view that exchange traded funds (ETFs) are most popular with younger investors, a new whitepaper from Pershing, a BNY Mellon company, in conjunction with Beacon Strategies, finds that investors between the ages of 51-70 who work with advisors are, in fact, the largest users of ETFs, followed by those over the age of 71.
The report, The Evolving ETF: Using Exchange Traded Funds in Client Portfolios, surveyed more than 1,500 advisors in the U.S and around the globe. More than two-thirds of advisors who use ETFs intend to increase their usage over the next 12 months, while 55 percent said that more than half of their clients already have ETFs in their portfolios.
“The widespread assumption across the investment management industry is that the continued growth and popularity of ETFs is being driven by younger investors. However, advisors are telling us that this is not necessarily the case,” said Justin Fay, director of financial solutions for alternative investments and ETFs at Pershing.
“We found that ETF usage in portfolios is most prominent among the Baby Boomer and Greatest Generation populations, mainly because these investors have become increasingly aware of the cost efficiency and access to a variety of styles that ETFs may provide, which can help them achieve their financial goals,” he added.
Pershing and Beacon Strategies’ whitepaper revealed a number of other key findings, such as:
Advisors view ETFs as critical investments in client portfolios
Performance is the key criteria for choosing a specific ETF
Further education needed around ETFs
“ETFs can be a particularly attractive investment option for advisors, offering customizable solutions and potentially lower-cost access to markets, countries and sectors than many other comparable investment vehicles. While the RIA channel continues to dominate in terms of ETF use, we are seeing increased adoption across other channels, particularly independent broker-dealers who are implementing ETFs more frequently within portfolios, and this trend is expected to continue,” concluded Fay.
To obtain a copy of Pershing’s whitepaper, follow this link.
CC-BY-SA-2.0, FlickrPhoto: Moyan Brenn. Cazenove Capital Management Acquires C. Hoare & Co's Wealth Management Business
Cazenove Capital Management, the UK wealth manager of Schroders, has reached an agreement with C. Hoare & Co. to acquire its wealth management business.
C. Hoare & Co. is a London-based private bank with a 300-year history of providing banking services to high net worth and ultra-high net worth clients. Over the last decade, it widened its service offering into wealth management and has developed a high-quality business with approximately 1,800 clients and £2.2 billion of discretionary assets under management at the end of June 2016.
Peter Harrison, Group Chief Executive at Schroders, said: “C. Hoare & Co.’s culture of client focus and exemplary client service are a strong fit with Schroders. This acquisition of its UK wealth management business grows our business in this area. I am confident that the relationship will create long-term value and benefits for clients, shareholders and employees.”
Andrew Ross, Chief Executive at Cazenove Capital Management, said: “We believe the combination of our two businesses will bring significant benefits and enhanced opportunities for our clients. The complementary fit between our two firms, the strong shared service culture, long-term thinking and established heritage of both businesses make this an ideal match.”
Alexander Hoare, Partner and Director at C. Hoare & Co., said: “We have chosen Cazenove Capital, the UK wealth manager of Schroders, because our firms share established heritages and similar cultures with the same dedication to customer service. We are very proud of the wealth management business that we have built over the last decade and we are keen for it to continue to flourish. We look forward to an ongoing relationship with Cazenove Capital.”
Financial terms of the transaction were not disclosed and it is expected to complete in the first quarter of 2017.
CC-BY-SA-2.0, FlickrPhoto: RIccardo Cambiassi. Claudia Ripley, Ingrid Tharasook and Fabrizio Palmucci Join Jupiter
Jupiter has appointed three product specialists to support its UK equity, Asia and GEM equity and Fixed Income and Multi-Asset teams. Reporting to Katharine Dryer, who heads the product specialist team at Jupiter, these new hires will provide additional support to some of our growing investment strategies and bring the recently-established product specialist team to full capacity. All three will have taken up their positions at Jupiter by the beginning of the fourth quarter of 2016.
Claudia Ripley joins Jupiter to work across all our UK equity funds, with a particular focus on those managed by Steve Davies and Ben Whitmore. She has nine years’ UK equity product experience, seven of which were spent as the Lead Retail Product Strategist on the BlackRock UK Active Equity Team.
Ingrid Tharasook joins from Coutts & Co.’s investment strategy team to cover Jupiter’s range of global emerging market equity funds. Her previous experience as a sector specialist in emerging market fixed income and Asian (and Japanese) equities will complement the management styles of Jason Pidcock and Ross Teverson as they build on recent momentum. A fluent Brazilian Portuguese and Thai speaker who has lived across four continents and has nine years’ investment experience, Ingrid brings a truly global perspective to her new role.
Fabrizio Palmucci joins the Fixed Income and Multi-Asset team to support recent growth in this area. Fabrizio spent five years developing the Pimco Source partnership as the Head of Fixed Income Product Management team at Source. Fluent in Italian, Spanish and French, Fabrizio will have a particularly strategic role to play in supporting our distribution teams as we increase our European footprint. His 14 years’ experience encompasses product management credit analysis and bond trading.
Katharine Dryer commented: “We are delighted to have attracted three talented professionals to these new roles. They will help us develop our communications with clients and enable our fund managers to stay focused on generating performance. The work of Alastair Irvine with the Jupiter Independent Funds team and Tommy Kristoffersen on Cedric de Fonclare’s team has demonstrated the value the product specialist role can provide as a key link between the investment and distribution teams. My congratulations go to all of the new recruits.”
Carlos Martinez . Carlos Martinez Joins Investment Placement Group’s Miami Office
Investment Placement Group (IPG), an Independent Broker Dealer and Registered Investment Advisor, recently announced that former Merrill Lynch advisor Carlos Martinez has joined the firm’s Miami, Florida office which is managed by Rocio Harb.
Martinez has over 20 years experience and through his 16 years at Merrill Lynch, he managed a 100 million dollar portfolio. “Making a decision to join a new firm is not to be taken lightly, taking in consideration what is best for my clients being the most important factor. After much consideration and due diligence, I determined that IPG is the best place for my clients and for me. They have highly skilled support teams and are focused on the needs of global investors” said Martinez.
“Carlos is true professional with a long track record of working with Latin American investors. He is a great addition to our team and we are happy to welcome Carlos to IPG” added Harb.
“Our goal has been to add experienced and highly qualified advisors in key locations, Carlos certainly fits the bill. We look of forward to his continued success at IPG”, said Gilbert Addeo, COO and Head of Business Development at IPG.
Joining Maurico Assael and Roberto Lizama, this is the third high profile hire of IPG in less than 10 days.
Photo: George Hodan. Afores’ AUM Grew 9.6% in the First 8 Months of 2016
Between December 2015 and August 2016 (8 months) assets under management of Afores had a growth rate of 10%, which exceeds the growth in 2014 (7%). Assets under management ended August at 2,784,587 million pesos (mp) amounting to 148 billion dollars.
Half of the growth of 243,624 mp is explained by the bi-monthly contributions made by workers affiliated and the other half by the returns generated by the Siefores; however transfers between Afores (workers who decide to switch from one Afore to another); as well as the reallocation of accounts, helps growth in some cases. In the case of transfers between January and August 2016, 130,494 mp moved accounts and 31,500 mp were relocated last August.
Reassignment is a mechanism through which the CONSAR “assigns” temporary accounts of workers who do not choose Afore o the better performing ones, seeking to encourage the Afores to obtain better long-term returns/performance. The allocation and reallocation process was conducted under the rules issued in January 2015 where the following factors were considered:
Increased net yield consistently as a central criterion in the process
Additionally, those who made the greatest Afores registration effort workers
Lower fees
Effort to promote voluntary savings at theAfores.
Afores that won accounts in this process were those that have shown good performance in the net return indicator. It is noteworthy that the receiving Afores this year should keep a favorable yield performance in order to keep accounts in the following remapping process which will happen in 2017. Otherwise, those accounts would be reassigned.
In the first eight months of the year, Pensionissste, grew 21.2% in assets managed reaching 154,340 mp at end-August. Of this 1.2% came from Afores transfers and 3.2% from reassigning accounts. Pensionissste has 5.5% market share and in the last six years its market share has remained virtually unchanged (5.7% in 2010).
Afore Azteca is the second fastest growing in 2016 by presenting a growth of 17.1% which corresponds to 3.9% from transfers between Afores. From 2010 to date, Afore Azteca has doubled its market share rising from 0.8% to 1.6% with organic growth without purchasing another Afore. If they maintain these growth rates, in about three years they could reach Metlife (10th place). In the last two years Metlife has only grown 3 to 4% per year (3% in 2015 and 4% in 2016). Via transfers Metlife lost 2.1% and 3.0% was reallocated, which sums a drop of 5.1%.
Afore Coppel grew 17% even though they lost 0.7% in transfers. In recent years this Afore has been increasing its market share year after year. In 2010 it was of 2.5% and today, they have 5.3%. Coppel is just 4% away form Afore Principal who holds the No. 7 position, and only grew 2%. Afore Principal lost 2.5% market share to transfers and in reassigments it had a net outflow of funds of 4.1%.
Afore Banamex carries a 14% growth in the year, where 1.9% was due to transfers between Afores and 2.5% reallocation. Banamex was the Afore that achieved the highest growth amongst both areas. In March of 2013 when Afore XXI-Banorte acquired Afore Bancomer, the latter was 61.6% larger than Afore Banamex. Today, only three years later, this difference has shrunk to only 33.2%. If this trend continues, in three years we could see Afore Banamex back as number one, position that it occupied between 2002 and 2012. Afore XXI-Banorte has grown 4.5% this year, but the transfer between Afores (-0.6%) and reallocation (-1.6%) affected him with a 2.2% decline.
Accumulated in the year (eight months) Afore Sura and Afore Profuturo have had a very similar AUM’s growth: Profuturo with 12% and Sura with 12.1%. Sura is the third largest Afore with 15.1% market share and Profuturo fourth with 13.0%. Sura transfer in was 0.9% and reallocation 2.6% while for Profuturo was 0.8% transfer in and 1.4% reallocation. Currently Profuturo is 16% behind Sura, while Sura needs to gain 17% market share to reach Banamex.
Invercap this year only brings growth in assets of 4.3%. Transfer out was -2.6% and -3.5% reassignment for a total of -6.1% in outflows. Invercap’s organic growth has been notable. In 2010 it had 3.6% market share and today 6.4%.
Inbursa has had an accumulated growth this 2016 of 3.1% where the transfer out was -3.2%. In 2010 Inbursa’s market share was 8.6% and today is 3.7%.
As can be seen, with only a couple of years, we could see significant changes in the market share among Afores, even without considering any sale or merger between Afores, which could not be ruled out.
CC-BY-SA-2.0, FlickrPhoto: JosepMonter / Pixabay. Building a Case for Increased Infrastructure Spending
The U.S. presidential election is entering the homestretch and investors are gauging the potential investment implications of the candidates’ proposed plans. As I noted in my last blog, amid a bitterly fought campaign, one topic is drawing a fair amount of attention: increased infrastructure spending.
It has been a particular area of focus for both parties and even the Federal Reserve. It is a rare area of agreement between the two presidential candidates, suggesting that whoever wins the election will likely emphasize it in the next administration. Moreover, the phenomenon is not only in the United States, but in other developed countries. Are the stars aligning for significant increased infrastructure projects, and does this have implications for investors? Among the reasons that suggest they may be:
Monetary policy
Central bank actions have been one of the most influential forces in shaping global markets in recent years. Yet we remain in a low growth environment, which raises the question: “Has monetary policy run its course in the current cycle?” The lack of growth momentum and weakened fundamentals around the globe suggest so.
Economic need
Given low economic growth, as well as the weak state of the nation’s infrastructure, using federal aid to repair bridges and roads and other projects could be a means of increasing productivity and fostering economic growth. See the chart below. In addition, infrastructure spending could help lift labor participation rates thus narrowing the gap between labor mismatch and labor productivity.
Depending on the type of project, infrastructure has the potential to create a positive multiplier effect on markets from an economic perspective. In the short term, infrastructure projects could provide private sector growth and jobs, thus potentially leading to increased tax revenues and a boost in consumer confidence and consumption. As a recent report from the BlackRock Investment Institute suggests, an increase in government spending can add up to 2% to gross domestic product (GDP), depending on where in the economic cycle the spending occurs. (Not surprisingly, it is likely more effective when it comes in a recession.)
Low funding costs
Large scale central bank bond purchase programs have pushed yields to all-time low (Source: Bloomberg), and in many cases, negative. While this has created challenges for investors, particularly those who require income, the low interest rate environment means the cost to finance infrastructure projects through government debt is far less than in years past.
This renewed focus on longer-term fiscal policy measures like infrastructure is not unique to the United States. In July, Japan announced a new ¥28 trillion stimulus package, of which ¥13.5 trillion is earmarked for a variety of fiscal policy initiatives centering on public infrastructure projects such as upgrading port facilities and building new food-processing plants that help boost food exports.
Similarly, the UK, facing the possibility of an economic slowdown—or even its first recession since the financial crisis—appears ready to incorporate aggressive stimulus beyond monetary measures. Like the U.S., minimal public resources have been allocated to infrastructure over the past decade. Private sector infrastructure spending in the UK is also drying up as a result of uncertainty around Brexit. The number of contracts aimed toward infrastructure-like initiatives is down by 23% over the past year (Source: Office for National Statistics, UK, June 2016).
In short, a combination of factors have created a compelling case for infrastructure investment. Should these scenarios unfold, equity sectors and industries related to infrastructure activities like industrials or transportation in the U.S. specifically, may stand to benefit. However, the timing and level of impact remain to be seen. It is important to recognize that how infrastructure projects are funded can mitigate some of the multiplier effect. For the U.S. in particular, it is also important to recognize that whoever wins the election could still face a divided government, raising questions about how quickly a bill could get passed, and how large a bill it would be.
To gain exposure to global infrastructure companies, investors may want to consider the iShares Global Infrastructure ETF (IGF). For U.S. exposures, investors may consider the iShares Transportation Average ETF (IYT) or the iShares U.S. Industrials ETF (IYJ).
Build on insight, by BlackRock written by Heidi Richardson
Andrew Formica, Chief Executive at Henderson. Henderson and Janus Capital will be Merging
A new giant will join the global asset management industry. The businesses of Henderson and Janus will be combined under Henderson, which will be renamed Janus Henderson Global Investors and will continue to be a Jersey incorporated company and tax resident in the UK. The combined group will be a leading global active asset manager with AUM of more than $320 billion dollars and a combined market capitalisation of approximately $6 billion dollars.
The merger will take place via a share exchange, with each share of Janus common stock exchanged for 4.7190 Henderson ordinary shares. Henderson and Janus shareholders are expected to own approximately 57% and 43% respectively of Janus Henderson Global Investors’ shares on closing, based on the current number of shares outstanding. The merger is currently expected to close in the second quarter of 2017, subject to requisite shareholder and regulatory approvals.
Henderson and Janus CEOs will lead Janus Henderson Global Investors together.
Andrew Formica, Chief Executive of Henderson, said “Henderson and Janus are well-aligned in terms of strategy, business mix and most importantly a culture of serving our clients by focusing on independent, active asset management. I look forward to working side-by-side with Dick, as we create a company with the scale to serve more clients globally, as well as the strength to meet their future needs and the growing demands of our industry.”
Dick Weil, Chief Executive Officer of Janus, said “This is a transformational combination for both organizations. Janus brings a strong platform in the US and Japanese markets, which is complemented by Henderson’s strength in the UK and European markets. The complementary nature of the two firms will facilitate a smooth integration and create an organization with an expanded client-facing team and product suite, greater financial strength, and enhanced talent, benefiting clients, shareholders and employees.”
According to a press release, the merger promises increased distribution strength and coverage in key markets, including the US, Europe, Australia, Japan and the UK, as well as a growing presence in the Asia-Pacific region, the Middle East and Latin America. The company will have approximately 2,300 employees, based in 29 locations around the world.
Henderson shares currently trade on the LSE and ASX, while Janus shares currently trade on the NYSE, after the merger the new company plans to have the NYSE as its primary listing.
Janus’ subsidiaries, INTECH and Perkins will be unaffected by the merger. INTECH CEO, Adrian Banner, will continue to report to the INTECH Board of Directors and Perkins CEO, Tom Perkins, will continue to report to the Perkins Board of Directors.
CC-BY-SA-2.0, FlickrPhoto: Moyan Brenn
. A Deeper Look into Japan’s Debt Problems
I have previously written about investing in the Asia Pacific region and why it is crucial that investors take a balanced and comprehensive long-term investment view (see ‘Capitalising on the Pacific Decade’). The prevailing market view on the region remains negative, mainly centring on China’s debt problem and general doubts about Abenomics. This article focuses on some aspects of this negativity from a sovereign balance sheet perspective and concludes that the potential dangers are overstated.
When analysing stocks, investors consider both balance sheet and income statements. But when it comes to sovereign analysis, analysts often focus more on the latter, which consist of ‘flow’ related economic data (such as GDP, trade, employment, production, capital flow, government budget) but place less importance on the former. Regarding a sovereign’s balance sheet data (national debt, current account), there is a tendency to focus solely on the government itself, ignoring the household or corporate sectors. Focusing on flow data makes sense for an open economy such as the US, where most of the productive sectors of the economy are held in the private sector via capital markets. The government plays a limited role on the asset side of the aggregate balance sheet. However, it can lead to incomplete or misleading conclusions in the case of Japan.
Japan: the misconception of too much debt
One of international investors’ major concerns regarding Japan is the government’s high debt level, without taking into account the household and corporate sectors. However, Japan’s national wealth largely resides in the household and corporate sectors, which makes the government’s heavy debt less of a concern. It also means that Japan is much less vulnerable to the sort of capital flight by offshore investors that often triggers financial crises.
As of 2014, the household sector’s financial net worth stood at 280% of GDP, which represents one of the highest levels globally and compares well with US at 260%. In contrast, the government’s debt to GDP ratio has risen significantly over the past two decades, from 67% in 1990 to 248% in 2015. In effect, the government has been forced to borrow to stimulate its economy because the household and corporate sectors refuse to consume and invest, instead choosing to save. So while the income statement of the country has remained flat for the best part of a decade, the national wealth is strong and Japan is able to export those savings to finance other countries’ deficits.
It’s not just the household sector that has accumulated significant wealth, the corporate sector also has a significant savings glut. Japanese companies are well known for sitting on large cash positions and being reluctant to invest. Japan’s listed companies hold over USD 1 trillion in cash and 56% of these companies are totally debt-free, i.e. net cash.
Japan’s economy has effectively become similar in position to a wealthy, ageing rentier, living off years of accumulated savings. The country’s strong balance sheet position allows the government room to experiment as it aims to change the deflationary mindset of an entire population and stimulate private demand. A bank run scenario is highly unlikely in Japan, which is why comparable debt analysis for heavily indebted countries is not relevant.
Most sovereign analysis on Japan ignores the wealth residing outside the government sector and over-emphasises the government’s deficit spending. The push for a higher sales tax, due to concerns about the government’s high debt ratio, was the wrong prescription for Japan. Prime Minister Abe’s first consumption tax hike was a costly policy error for Abenomics as it unwound the momentum and positive early effects from the government’s stimulus programme. The recent decision to postpone the second hike was the right call.
The country’s strong balance sheet also explains the ‘safe haven’ status of the Japanese Yen and its recent strength. Other reasons for Yen strength include the country’s surging current account as a result of a significant change in the net trade balance from 2014 to 2016 due to lower oil imports and because declining inflation expectations, not nominal interest rates, are driving foreign exchange rates. Real interest rates in Japan have actually been rising more than the US, because expected inflation rates are collapsing5.
Abenomics was initially quite effective for the economy and the Nikkei until the first sales tax hike took place in 2014. The BOJ’s ‘Halloween easing’ in 2014 further pushed the Yen from USD 110 to 120 and the Nikkei up to 20,000. However, without further action, the Yen strengthened for the reasons stated above and the Nikkei retreated to 2014 levels.
In our view, the Yen will tend to strengthen unless BOJ Governor Kuroda’s resolve to raise inflation expectations regains credibility. Unfortunately, the BOJ’s monetary policy has been doing much of Abenomics’ heavy lifting over the past couple of years and has few bullets left. Further bond buying and even more negative rates have lost their potency because these monetary signals are not affecting the demand side of the economy. What is required now is even stronger fiscal policy. The combination of strong fiscal and monetary policies should help to raise inflation expectations and lower the Yen.
The question is not if the BOJ and the government will act, but when and how. Recently, market participants have been openly debating the possibility of debt monetisation or ‘helicopter money’ in Japan. In my view, when quantitative easing and NIRP are coordinated with a stronger stimulus programme, the effect on the economy and general inflation expectations will be similar to more controversial forms of monetary policy. The difference between this and the BOJ deciding to directly underwrite the debt incurred by the Ministry of Finance is merely a matter of semantics.
Yu-Ming Wang is Global Head of Investment and Chief Investment Officer, International at Nikko AM.
