The underlying concerns that led to the worst start to a new year in the financial markets are still present despite the apparent return of risk-on appetite, say strategists at Tokyo-based investment house, Nihon International.

The first few weeks of the year saw substantial falls on global stock markets from New York to Shanghai as investors panicked about the state of the global economy, falling energy prices and the questionable outlook for the Chinese economy.

“Since the Great Recession, China’s economy had been the engine of growth for the global economy as both the United States and Europe battled falling prices and weak demand both at home and abroad. Investors figured that, with China slowing and US interest rates starting to rise, it was a good time to take risk off the table and that led to the sharp losses we saw,” said Erik Larsson, chief market strategist at Nihon International

In recent weeks, however, markets have staged an impressive rally that has seen US and European markets recover most of their losses. Asian markets, Shanghai and Tokyo in particular, have recovered less forcefully but risk appetite is not as low as at the beginning of the year.

Despite the optimism, Nihon International urges caution citing the fact that, in its opinion, the risks to the global economy remain and that, despite some positive economic data out of the United States, much of the important indicators like service sector growth, wage growth, the housing market and manufacturing, the country still appears to be heading for a recession.

About Nihon International
Nihon International is a top-tier independent wealth management and investment house that delivers high caliber financial services to both private clients and institutions.

To individuals, families and charitable foundations with in excess of US$250,000 in investable assets, we provide discretionary investment management, capital advisory investment management and full execution-only services.

To pension funds, insurers and mutual funds, we provide invaluable market insight via the most meticulous research and analysis, seamless, cost-effective execution and a comprehensive suite of value added investment banking services that include securities lending on an unlimited number of global exchanges.