Japanese institutions reduce US holdings -- fear US stocks will decline:
Wednesday July 28, 11:52 pm Eastern Time
POLL-Japan investors to boost Euro bond weighting
By Akiko Ishiwata
TOKYO, July 29 (Reuters) - Japanese institutional investors plan to raise their investment in European bonds in August, but will favour stocks over bonds in their overall allocation for a fifth straight month, a Reuters survey showed on Thursday.
In the monthly Global Asset Allocation survey, which asked 10 Japan-based financial institutions in late July about their investment strategy for August, the average overall portfolio weighting for stocks rose slightly to 52.55 percent.
The weighting for bonds also edged up, to 33.88 percent, while the weighting for cash fell to 13.58 percent from 15.01 percent.
The survey found that investors were planning to raise their weighting of euro-zone bonds within their fixed income portfolios.
The weighting for bond investment in Europe including Britain rose to 53.51 percent from 48.86 percent in the previous survey, exceeding the 38.17 percent weighting for the United States and Canada, down from 41.71 percent previously.
Within Europe, the allocation for German bonds rose sharply to 21.67 percent from 17.79 percent the previous month.
Societe Generale Yamaichi Asset Management maintained its overweight position in euro-zone bonds and stayed underweight on British bonds, while lowering its exposure to U.S. bonds to neutral.
Due to renewed speculation of another credit tightening in the United States in the wake of Federal Reserve Chairman Alan Greenspan's Humphrey-Hawkins testimony, investors expect a jittery Treasury market and are taking a cautious stance.
The weighting for Japanese bonds stood at 7.67 percent, the lowest since the Reuters asset allocation survey began, and far below the benchmark of 21.28 percent.
Investors cited low yields as the reason for the decline, whereas in the past they had been concerned about the possibility of an oversupply of bonds stemming from potential increases in the issuance of Japanese government bonds.
With regard to stocks, the survey found that investors' weighting for the United States and Canada stood at 44.66 percent, up from 43.37 percent, with Europe including Great Britain at 32.78 percent and Japan at 20.44 percent.
Despite the popularity of stocks relative to bonds, some investors were concerned about the potential for a correction in the U.S. stock market that could drag down European and Japanese stock markets.
Nomura Securities said it would reduce its allocation to U.S. and Asian stock markets, while raising its euro-zone stock weighting, in line with global capital flows from the United States to Japan and Europe.
A negative outlook for the dollar and renewed pressure on the U.S. stock market mean it is prudent to take a cautious stance on investment in stocks, Nomura Securities said.
''The impact of yen-selling intervention by Japanese authorities is weak since it has been conducted in the face of a shrinking disparity in economic sentiment between Japan and the United States,'' Nomura said.
Investors said the Tokyo stock market was due for a downward correction due to the yen's rise, which tends to make Japanese exporters less competitive. In the absence of fresh indicators suggesting a recovery in the Japanese economy, moves in Tokyo stocks would be dictated by moves on Wall Street, they said. |
