Some may cite low GDP growth as a basis for under performance of equity markets but as many studies have shown, there is no correlation with the stock market. This is largely due to its forward discounting valuation platform.
The UK markets stood out as the first European country to be adjusting its rate upwards in what is a fine balancing act on the part of the Bank of England, because it is one of the most indebted places in the world, not to mention the housing boom which is not easy to deflate. Previously in deep recession, these countries have now bottomed out and turned for the better, significantly Spain, Greece and Portugal.
Political uncertainties are merely noises that do not significantly impact on his strategy. Dysfunctional governments all over the place, Malaysia is a prime example of equity markets working in spite of it.
Funds Like Abe
As prime minister Shinzo Abe's "Abenomics" continues to work to boost Japan's economy, the country's equity funds may be a risky but profitable choice for mandatory provident fund investors. Japanese equity funds were the biggest performers last year when Abenomics started taking effect, with returns reaching 33 percent.
But the situation then changed, with the funds recording negative returns since the beginning of the year. Average returns amounted to negative 3.55 percent for the first half. This came as the Nikkei slumped 9 percent in the first quarter. However, a recovery is under way in Japan.
A sales tax hike in April triggered a 12 percent drop in sales that month. But the drop eased to just 4 percent in May, as retail sales warmed up again.
Tokyo is optimistic that the economy will continue to improve and has raised its estimates on private consumption.
Abe's "third arrow" of sweeping reform - like the creation of "national strategic economic growth areas" in Tokyo, Kansai and Fukuoka - also helped fuel a rally in Japanese stocks.
That came after the first and second arrows of Abenomics - fiscal stimulus and monetary expansion - achieved considerable success in spurring economic renewal.
Consumer prices in Japan rose at an annual rate of 3.4 percent in May, the fastest pace in 32 years, and the unemployment rate is 3.5 percent - the lowest since 1997.
Data show that Japanese equity funds received total capital inflow of about US$12.8 billion as of mid-June. Net capital outflow for the second week that month amounted to about US$170 million. As investors have started to bring in capital since May, the market is assumed to be regaining confidence in Japan. People have started to reevaluate the effect of Abenomics, as the sales tax hike has not brought the expected slump in share prices. Investors have started to regain interest in Japanese stocks and liquidity is increasing and flowing into tangible assets.