Reuters Summit: Pandemic to stimulate more active stock investment strategies - Nissay Asset CEO

Ricoh

01/12/2020 13:50

(Repeats story with no changes to text, updates link)
    * For other news from Reuters Global Investment Outlook
Summit:
    * https://www.reuters.com/summit/investment21
https://www.reuters.com/summit/investment19
    * Some industries unlikely to fully recover
    * Shares of companies with high ESG scores doing very well
    * Global stocks to rally in 2021 on policy support, low
rates

    By Hideyuki Sano and Tomo Uetake
    TOKYO, Dec 1 (Reuters) - Social transformations triggered by
the coronavirus pandemic are making index-following, passive
stock investments less attractive and could reverse a decline in
active stock investments, the chief executive of Nissay Asset
Management said.
    Hiroshi Ozeki said a recovery to pre-pandemic levels will be
difficult for some industries such as restaurants, airlines and
train operators.
    Energy-intensive sectors also would be pressured by the need
to deal with climate change, he added. 
    "Even after the pandemic is over and even with some
government help, they won't return to where they were," said the
chief of the 13 trillion yen ($125 billion) asset management
firm.
    "Up until now, passive style has been a vogue - it's been
said to be the most efficient investment. But with that, you are
automatically putting your money in those industries with no
growth stories," he said.
    Assets held by exchange traded funds (ETFs), among the most
convenient passive investments, have been increasing globally
over the last decade.
    In contrast, active funds, which try to aim for higher
returns based on stock picking, have seen large outflows in
recent years.    
    "In the coming few years, active investments are likely to
outperform passive ones. The era of active investment may be
back," Ozeki said.
    Companies which Nissay scores highly for Environment, Social
and Governance (ESG) had done better this year, he said.   
    Enterprises poised to benefit from the shift to renewable
energy would prosper after the United States and Japan join
other countries in adopting ambitious targets to achieve carbon
neutrality.
    U.S. President-elect Joe Biden has committed to net zero
emissions by 2050 and Japanese Prime Minister Yoshihide Suga in
October set the same goal for Japan.  urn:newsml:reuters.com:*:nL4N2HE2HS
    "Some companies that have committed to 100% renewable power
targets, such as Sony  6758.T  and Ricoh  7752.T , are saying
that Japan is now becoming the bottleneck among the developed
world in achieving that goal," he said, citing limited
availability and high costs of renewable energy.
    "So it means a lot that Suga has made that target. For
investors, too, it reduces risk when the government clarifies
its long-term goal," Ozeki said.
    
    Ozeki also said for next year he expected:
    * Global share prices to rally further as the pandemic lasts
longer than expected, forcing policymakers to continue to
support the economy through monetary and fiscal measures.
    * Short-term U.S. interest rates to stay low, making
currency-hedged dollar bond investments attractive for Japanese
investors.

    ($1 = 104.40 yen)    
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 (Reporting by Hideyuki Sano in Tokyo and Tomo Uetake in Sydney;
Editing by Stephen Coates)
 ((hideyuki.sano@thomsonreuters.com; +81 3 4520 1195;))