Risk of yen rebound makes Japan Post Insurance wary of buying unhedged foreign bonds (updated)

Japan Post Insurance

27/10/2021 07:39

(Adds details)
    TOKYO, Oct 27 (Reuters) - Japan Post Insurance is cautious
about buying foreign bonds without a currency hedge due to the
risk of the yen rebounding after its fall to a four-year low, a
senior official said on Wednesday.
    "We are cautious on unhedged foreign bonds. The yen has
already weakened considerably. We are not increasing their
holdings when the yen is at current levels," Hiroyuki Nomura,
head of investment planning, told reporters in a news
conference.
    "The more the dollar gains, the more we need to be wary of a
future rebound in the yen. The dollar has gained recently on the
strength of the U.S. economy but we think further room for its
gains will be limited."
    Turning to share markets, Japan Post's investment head said:
"We expect a continued rise in global equity markets. But since
the rally in U.S. shares has been fast, they could face a
correction. On the other hand, Japanese shares are likely to
play a catch-up and appear to have further room to gain."
    
     Following is a summary of the firm's investment plan for
the half year to March.
    
    -- Plan to reduce yen bond holdings, its core assets, as
total assets are expected to decline. But ready to step up
buying if Japanese government bond yields rise. 
    
    -- Plan to keep holdings of foreign bonds, with or without a
currency hedge, steady in October-March. 
    
    -- Plan to increase domestic stock holdings slightly while
maintaining levels of foreign stock holdings. 
    
    -- Plan to increase investment in alternative assets, such
as private equity, infrastructure equity and real estates.

 (Reporting by Hideyuki Sano; Editing by Simon Cameron-Moore)
 ((hideyuki.sano@thomsonreuters.com; +81 3 4520 1195;))