Nomura Holdings, Inc. · TSE:8604
Nomura — Investor Presentation (January 2017)
16 slides from Nomura's investor presentation, January 2017
Slide 1: Macro & Market Scenarios
Connecting Markets East & West Global Markets Research Macro & Market Scenarios Kevin Gaynor Head of International Research +44 207 102 7800 [email protected] NomuraNow.com See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts. Any authors named on
Slide 2: The view from 1922!
The view from 1922! Where are we? A strange expansion Source: Malcolm Churchill Rorty, “Some problems in current economics”. AW Shaw Company, 1922 1
Slide 3: Measures of business cycle vs top-down returns
Measures of business cycle vs top-down returns After two years of underperformance global equities have been outperforming inflation last year. global government bonds. Performance in 14/15/16 was undermined by margin The recent pick-up in observed and expected growth, combined with higher compr
Slide 4: Macro context
Macro context As we start 2017 measures of economic slack are moving toward balance for the Given commodity price increases headline should move above core pointing to developed economies. > 2.5% CPI. Actual growth measures have increased to an above trend rate recently. The implication is h
Slide 5: What is the market pricing?
What is the market pricing? Our market returns based indicator shows a substantial pick-up in showing falling risk aversion as growth expectations increase. implied growth and EPS growth expectations. Higher breakeven inflation but a smaller increase in real yields. Risk asset discount rate ha
Slide 6: Is the market view warranted?
Is the market view warranted? Tighter margins and higher cost of capital vs CEOs’ growth expectations RoE = margins x asset turn x leverage US labour market and unit labour costs US profit margin and macro proxy 60 6 -2 50 5 4 -1 40 3 0 30 2 1 20 1 2 10 0 01/87 02/88 03/89 04/90 05/91 06/92 07/93 08
Slide 7: Trump-o-nomics
Trump-o-nomics We understand the theory – question is what can be done and what gets done first. Demand side first – and it’s tax that matters – supply side later. Some inflation now – higher later? r p AD IS Reduce labour vs Red Tape Reverse globalisation vs 2018? infrastructure Globalised Fed Poli
Slide 8: Inside/Outside money
Inside/Outside money Credit growth, GDP growth and financials profits US private sector credit intensity of growth Real Fin Profits, real debt stock and sectoral debt 500 50000 18000 45000 Real GDP ($ bn) 400 40000 16000 y = 0.2921x + 3871.3 300 35000 30000 200 14000 100 25000 20000 y = 0.1666x + 78
Slide 9: Macro context
Macro context Globalisation has been conspicuously absent post 2008. sectors. Labour productivity in major economies has slowed. EM is running an aggregate deficit on trade and DM has gone Capital stock is high in many economies – in the wrong into surplus. Global trade vs GDP US Labour prod
Slide 10: Macro context
Macro context DM fiscal situation has improved on a flow basis but debt revenues down. 10ppt debt increase in three years. stock remains stubbornly high Credit growth slowing in EM, steady improvement in DM. EM fiscal situation is deteriorating as spending is up and EM export prices rising f
Slide 11: Current market settings vs history
Current market settings vs history The market has dramatically increased its implied growth rate – only 20% of observations since 1990 have been higher. Global Index BEI inflation is now at the long-run median – only 30% of observations since 1990 are higher. Risk premium has fallen toward its
Slide 12: 2017 – cyclically heating up, structurally unclear
2017 – cyclically heating up, structurally unclear We have a cyclical story that is clear (and fairly priced?). Structural impact will take time to become clear. What happens to the economy will decide the shape of the securities market line. What sort of economy? Structural & cyclical change?
Slide 13: Appendix A-1
Appendix A-1 Analyst Certification I, Kevin Gaynor, hereby certify (1) that the views expressed in this Research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this Research report, (2) no part of my compensation was, is or will be di
Slide 14: Disclaimers
As at 3 January 2017. *As defined by the EU Market Abuse Regulation **The Nomura Group as defined in the Disclaimer section at the end of this report Disclaimers This publication contains material that has been prepared by the Nomura Group entity identified on page 1 and, if applicable, with the con
Slide 15: warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect
warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling t
Slide 16: (including but not limited to related parties, affiliated companies and any other third parties)
(including but not limited to related parties, affiliated companies and any other third parties) or engage in any activities in connection with the reports which may involve conflicts of interests. INFORMATION ON SECURITIES / INSTRUMENTS NOT EXECUTABLE BY NOMURA INTERNATIONAL (HONG KONG) LTD., TAIPE
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