Each December, strategist Richard Bernstein publishes a list of investment themes for the coming year.
Here is what he had to say about Emerging Market and Japan:
“As of the date of this report, the Nikkei 225’s YTD total return of roughly 53% has far outpaced the MSCI Emerging Market’s -1%. We think Japan is likely to outperform emerging markets again during 2014. The aftershocks of the global credit bubble (i.e., massive global overcapacity and falling productivity in the emerging markets) could result in currency wars. Our bullishness on Japan in 2013 was based on a falling Yen, and we think Japan may be the first country to recognize that countries must compete on price (i.e., depreciating currency) in the absence of improving demographics and productivity. Although consensus return expectations for Japan do not seem conservative, we still believe that investors have yet to fully recognize the significant structural headwinds facing the emerging markets.”