SPW MarketWatch: February 2024

  • Shunil Roy-Chaudhuri, Personal Finance and Investment Writer
  • 05 March 2024
  • 5 mins reading time

Source: FactSet, 4 March 2024. Figures are monthly price returns in local currencies for February 2024.

Japanese shares at record high

The Japanese stock market, as measured by the index of Japan’s largest 225 companies, hit a record high in January. In so doing, it surpassed the peak of 1989, when a stock market bubble led Japan’s share of global equity (share) markets to exceed that of the US.

The current performance partly reflects reforms enacted during the regime of former prime minister Shinzo Abe. These include the introduction in 2015 of a corporate governance code that has led to an increase in the number of external independent directors on company boards.

In our view, the new record does not suggest another soon-to-burst market bubble, although markets are inherently unpredictable. Valuation measurements for Japanese companies are not as high as they were in 1989, and we expect to see healthy company earnings from these companies overall. So we currently have a positive stance on Japanese equities.

In fact we have a positive stance on equities as a whole. We think valuation measurements for global companies generally look attractive and we see opportunities for stock market growth in the US and Europe as well as Japan.

Retail investors can now buy newly issued gilts

Non-professional retail UK investors can now, for the first time, buy newly issued gilts. Gilts are UK government bonds, which are IOUs issued by the government (when you buy a gilt you are effectively lending money to the government).

Gilts have fixed terms, after which you get your capital back, although you can sell them at any time at the prevailing market price. Gilts also pay you regular interest.

Previously, retail investors could only buy gilts on the secondary market, in which they were purchased from other investors, rather than from the UK Treasury itself. This new arrangement gives retail investors the chance to buy gilts through auctions, typically at slightly discounted prices.

We currently have a neutral stance on UK government bonds, as we do with government bonds globally. We believe the US economy looks relatively resilient, which could reduce demand and prices for these relatively safe but low-returning investments.

Whether purchasing a newly issued gilt would be right for you would depend on your financial circumstances and you may want to speak to a financial adviser if considering such an investment. Please note that Schroders Personal Wealth does not offer trading for individual securities, including individual gilts.

Important information

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This article is for information purposes only. It is not intended as investment advice.

The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment.

In preparing this article we have used third party sources which we believe to be true and accurate as at the date of writing but can give no assurances or warranty regarding the accuracy, currency or applicability of any of the contents in relation to specific situations and particular circumstances.

Any views expressed are our in-house views as at the time of publishing. This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without prior written content.

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