Japan's Yucho, Kampo cautious on euro investment
TOKYO, July 30 (Reuters) - Japan's postal savings and postal life
insurance systems will wait to see how European Economic and Monetary
Union (EMU) unfolds before determining their stance towards the euro,
officials said on Thursday.
''We would like to see how the monetary union develops, so at this point
we are not aggressively buying bonds denominated in EMU currencies,'' an
official for the Postal Savings Bureau (Yucho) said.
''But we will allocate a certain amount of funds for foreign bonds,
including euro-denominated bonds, in order to diversify risk, taking
into account the high interest rates offered by foreign bonds compared
to domestic bonds,'' the official said.
Yucho deposits most of its money, which totals over 240 trillion yen, at
the Finance Ministry's Trust Fund Bureau and invests the rest in
financial markets on its own. Roughly three-fourths of its own
investment, which totalled 45.7 trillion yen at the end of March, is in
domestic bonds.
Yucho's investment in foreign bonds totalled 3.6 trillion yen. It held
442.3 billion yen worth of German mark-denominated bonds and 111.0
billion yen worth of European Currency Unit (Ecu) denominated bonds at
the end of March.
Its holdings of German mark bonds rose by 296.0 billion yen from the
previous year, while its holdings of Ecu bonds fell by 10.6 billion yen.
The Postal Life Insurance System (Kampo), one of the largest
institutional investors in the world, had assets worth 105.7 trillion
yen at the end of March.
A Kampo official said it was ''extremely interested'' in the euro, but
added that there were too many uncertainties at this point to say what
their investment stance would be when EMU starts in January 1999.
''We don't know how much market liquidity there will be, or how yields
of euro-denominated bonds will move. We are now studying such issues,''
the official said.
Kampo held 3.98 trillion yen worth of foreign bonds at the end of March.
Among EMU first-wave currencies, Kampo held 234.3 billion yen in German
mark bonds, 146.6 billion yen in Italian lire bonds and 120.6 billion
yen in French franc bonds.
The amount of its German bond holdings fell by 13.9 billion yen from a
year earlier, Italian lire bonds fell by 46.6 billion yen and French
franc bonds fell by 27.4 billion yen.
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