Markets

Nomura: The Story For 2011 Will Be A Rebirth In U.S. And Japanese Equities

Gregory White

2010-12-07T15:42:27Z

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Nomura are calling for 2011 to be a great year for U.S. and Japanese equities according to their new global strategy outlook.

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There view of the year ahead breaks up into three trends:

Inflation in emerging markets will limit returns on equities there
Accommodative monetary policy in the U.S. and Japan will support equities in those economies

Nomura's call is based on rising earnings and declining bond yields, which will force investors to take more risks and head into equities.

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Sentiment has turned bullish on a global scale.

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Global trade is not back to pre-crisis levels, but it is making a V-shaped recovery, based on emerging market demand.

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The global return on equity is rising again, and according to Nomura, will head further above its average.

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Growth in EM has led to a massive amount of inflows.

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And the result of emerging markets growth and investment is inflation, which will force governments to enact tightening measures.

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Right now, investors are focused on bonds and cash, not equities.

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Japan and the U.S. have underperformed emerging markets and developed Asia, but that may change with new tightening policies.

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Earnings are set to rise in the U.S., through 2012 (good for stocks).

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Japanese equities too have underperformed. Nomura believe this will change because U.S. investors are moving out of bonds. The spread between U.S. bonds and Japanese bonds has been determining the exchange rate for the yen, according to Nomura, and that spread will now widen weakening the yen (good for Japanese stocks).

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Still not satiated on 2011 predictions?

Crystal ball

Here's what Societe Generale thinks is coming for investors in 2011 >

Stocks U.S. economy Japan

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