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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (27682)	4/17/2005 12:34:43 PM
From: Chispas	Respond to of 116555

Japan co holds off dollar bond buying . . . . . . . DAILY TIMES (Pakistan) Sunday, April 17, 2005 TOKYO: Prospects of higher US interest rates are prompting Japan’s big life insurers to hold off on dollar bond buying, a survey of the giant investors on their plans for the new fiscal year showed. But higher US rates, which make currency hedging more pricey, and expectations of a higher dollar are making the investors more confident about holding the bonds without selling dollars on the currency market to hedge exchange rate risk. In a series of interviews with eight of Japan’s nine biggest life insurers, whose 150 trillion yen ($ 1,386 billion) of assets are nearly the size of Italy’s economy, a handful also said they would sell US Treasuries and shift some funds to euro bonds in the year that started on April 1 as rising US interest rates cut the value of their holdings. “We don’t think the attractiveness of hedged foreign bonds has disappeared completely, but it is certainly diminishing as US rates continue to rise,” Toshihiko Nagao, investment strategy manager at Mitsui Life Insurance Co told Reuters. Mitsui, which holds around 1.5 trillion yen ($ 13.86 billion) of foreign bonds, roughly split 50-50 between US Treasuries and euro bonds, said it was considering cutting its average hedge ratio by 10 percent to 20 percentage points from 80 percent. Like its rival Meiji Yasuda Life Insurance Co, Japan’s third-largest life insurer, Mitsui said it is keen to gradually raise the weight of euro bonds in its portfolio. The insurers also generally viewed the prospects for Japan’s economy as upbeat, with some planning to slightly increase their allocation to domestic stocks after a long period of dumping shares whose values were slashed in the early 1990s crash. Japanese life insurers have ploughed almost 15 trillion yen ($ 138.4 billion) into foreign bonds in the past five years, since rock bottom yields on Japanese government bonds (JGBs) have made it hard for them to pay returns guaranteed to policyholders. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ dailytimes.com.pk