Table: Wary of potential yen rebound, many Japanese insurers to reduce foreign bond holdings

Japan Post Insurance

27/10/2021 09:54

* For a story on Japan insurers' plans, see  urn:newsml:reuters.com:*:nL4N2RN1F5

    TOKYO, Oct 27 (Reuters) - Many Japanese life insurers have said they plan to reduce their
foreign sovereign bond investments without currency hedges between October and March on the view
that the yen could rebound, while increasing their yen bond holdings to meet regulatory
requirements.
    The comments were made during press conferences and interviews with Reuters over the past 10
days.
    Most insurers also said they prefer credit products over sovereign bonds, which continue to
offer low returns due to ultra-easy monetary policies globally.
    Following is a summary of the investment plans of Japan's major life insurance companies for
the half year through March 2022. For more stories, see  JP/INS .

FOREIGN BONDS
----------------------------------------------------------------------------------------
Nippon Life    to reduce foreign bonds without FX hedge, to keep FX-hedged holdings flat
Dai-ichi       no current plans to change holdings on FX-hedged and non-hedged bonds
Meiji Yasuda   to reduce holdings of FX-hedged sovereign bonds, increase credit products 
Sumitomo       to add foreign bonds without FX hedge and reduce those with hedge
Japan Post     to keep holdings steady, cautious on investment without FX hedge
Fukoku         to raise overall holdings by 90 bln yen, 20 bln yen more than initial plan 
Taiju          to reduce holdings of FX-hedged foreign bonds, to add unhedged ones
Taiyo          to keep holdings flat due to concerns about future rise in FX hedge costs
Daido          holdings to be flat to lower, to increase FX hedge if yen's fall accelerates 
Asahi          to increase overall holdings by 20 bln yen, reduced FX hedge in April-Sept


JAPAN BONDS

---------------------------------------------------------------
Nippon Life    to increase yen bonds, including fully yen-swapped foreign debt 
Dai-ichi       to increase yen bond holdings
Meiji Yasuda   to increase holdings steadily, may buy more when yields rise
Sumitomo       to increase holdings by 100 bln yen
Japan Post     to reduce holdings but could buy if yields rise
Fukoku         to reduce pace of increase in JGB holdings versus initial plan
Taiju          to trim holdings overall but to increase ultra-long bonds
Taiyo          to keep overall holdings steady while increasing credit product investments
Daido          to increase holdings of ultra-long bonds
Asahi          to reduce holdings by 30 bln yen


JAPAN STOCKS

---------------------------------------------------------------
Nippon Life    to keep holdings flat
Dai-ichi       to cut back domestic stock holdings in order to reduce risks
Meiji Yasuda   on track to cut equity holdings by 150 bln yen by 2023/24
Sumitomo       to increase holdings by a few billion yen
Japan Post     to increase holdings slightly 
Fukoku         to slow pace of increase in holdings  
Taiju          to keep holdings steady after reducing by 3 bln yen in H1
Taiyo          to keep holdings steady but may buy on dip
Daido          to keep holdings flat but may buy on dip
Asahi          to keep holdings steady

FOREIGN SHARES, ALTERNATIVE INVESTMENTS

---------------------------------------------------------------
Nippon Life    to increase foreign stocks, alternative assets for diversification
Dai-ichi       to increase properties, buy-out & infrastructure funds
Meiji Yasuda   to keep holdings of property assets flat
Sumitomo       to add foreign stocks, private equity funds, other alternative assets
Japan Post     to keep foreign stock holdings flat; to add alternative assets such as properties
Fukoku         to increase holdings of foreign stocks
Taiju          to raise investments in ESG funds, other new areas
Taiyo          to increase investment in private equity, private debt
Daido          to step up investment in infrastructure-related project finance
Asahi          to increase alternative assets, keep holdings of foreign stocks steady

    
EXPECTED MARKET RANGES
---------------------------------------------------------------
(previous forecasts in brackets)

                 USD/JPY      EUR/JPY       NIKKEI         JGB 10-yr      US 10-yr
Nippon Life     98 - 118   113 - 139   23,000 - 33,000  -0.25 to 0.25%   0.7 - 2.4%
              ( 97 - 117   112 - 138   21,000 - 31,000  -0.25 to 0.25%   0.7 - 2.4%)
Dai-ichi       108 - 120   120 - 140   26,000 - 34,000  -0.25 to 0.25%   1.0 - 2.0%
              (100 - 115   120 - 140   28,000 - 36,000  -0.25 to 0.25%  1.25 - 2.25%)
Meiji Yasuda   107 - 114   126 - 134   27,000 - 32,000  -0.15 to 0.2%    1.6 - 2.1%
              (106 - 115   126 - 136   26,500 - 32,000   -0.2 to 0.2%    1.6 - 2.15%)
Sumitomo       102 - 117   115 - 145   26,500 - 34,000  -0.05 to 0.15%   1.0 - 2.0%
              (102 - 117   115 - 145   25,500 - 33,500   -0.1 to 0.25%   1.3 - 2.3%)
Japan Post     107 - 115   125 - 135   27,000 - 33,000      0 to 0.25%   1.2 - 1.9%
              (105 - 117   125 - 140   27,000 - 33,000      0 to 0.25%  1.25 - 2.25%)
Fukoku         105 - 120   120 - 140   22,000 - 33,000  -0.25 to 0.25%   1.2 - 2.2%
              (100 - 115   115 - 135   22,000 - 33,000   -0.2 to 0.3%    1.2 - 2.0%)
Taiju          107 - 115   125 - 135   29,000 - 33,000  -0.25 to 0.25%   1.2 - 2.0%
              (105 - 115   124 - 136   29,000 - 35,000  -0.25 to 0.25%   1.5 - 2.3%)
Taiyo          105 - 120   120 - 140   25,000 - 34,000  -0.25 to 0.25%   1.0 - 2.0%
              (100 - 115   120 - 135   25,000 - 36,000  -0.25 to 0.25%   1.0 - 2.5%)
Daido          108 - 116   124 - 138   26,000 - 33,000   -0.1 to 0.30%   1.3 - 2.0%
              (104 - 118   124 - 140   25,000 - 34,000    0.0 to 0.25%   1.3 - 2.5%)
Asahi          108 - 118   125 - 137   27,000 - 32,000    0.0 to 0.2%    1.2 - 2.0%
              (105 - 115   126 - 138   25,000 - 33,000    0.0 to 0.2%    1.2 - 2.2%)

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Japanese insurers' foreign bond buying    http://tmsnrt.rs/2oZOJ7E
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 (Reporting by Tokyo Markets Team, Editing by Ana Nicolaci da Costa)
 ((hideyuki.sano@thomsonreuters.com; +81 3 4520 1195;
))