October 29, 2019 / 9:04 AM / 22 days ago

REFILE-Japan Post Insurance plans to increase risk assets in Oct-March

(Refiles to add full company name in headline)

* Plans to increase holdings of Japan stocks, foreign bonds

* To reduce holdings of foreign bonds with currency hedge

* Expects dollar to stay firm on relative strength of U.S. economy

By Hideyuki Sano

TOKYO, Oct 29 (Reuters) - Ditching a cautious investment stance it had kept for a couple of years, Japan Post Insurance plans to increase exposure to risk assets in the current financial half year to March, the company said on Tuesday.

The insurer, a part of former state-run postal system Japan Post Group, thinks the global economy will avoid a recession even though uncertainties remain on U.S.-China trade war and Brexit.

“In the developed world, the service sector is increasingly important and its firmness should support the economy and help to avert a recession in the U.S., Europe and Japan,” Shigeaki Asai, senior general manager of the investment planning department, told reporters.

In the current financial half year, Japan Post Insurance, which holds 73.4 trillion yen ($673.5 billion) of assets, plans to increase Japanese stocks as well as foreign bonds without a currency hedge.

The company, also known as Kampo, plans to gradually raise its holdings of those assets, starting with an increase of around 100 billion yen ($918 million), Asai said.

Japanese shares are relatively cheap compared with their global peers, he said.

The company also expects the U.S. economy to be relatively stronger than its rivals, which in turn would support the dollar against the yen and the euro, Asai said.

Kampo expects the dollar to stay between 105 and 115 yen in the current half year. It stood at 108.91 yen on Tuesday.

The firm’s stance marked a contrast from its risk-averse investment plans it has kept until the previous half year that ended in September.

Since 2017/18, it had been reducing foreign bonds without a currency hedge while increasing those with a hedge.

Currency hedged foreign bond investments had been popular among Japanese investors for years, but rising costs of dollar hedging due to higher U.S. interest rates are making that strategy increasingly unattractive.

Japan Post officials said the high hedge cost was a factor in their thinking.

The cost of a three-month hedge stands at 2.60%, above the 10-year U.S. Treasury yield of 1.85%, forcing yen-based investors to buy riskier corporate debt.

Japan Post Insurance also plans to increase investments in alternative assets.

The company said its new money will shrink after it has refrained from active sales since July following revelations of misconducts in its sales practice.

$1 = 108.98 yen Reporting by Hideyuki Sano and Tomo Uetake, editing by Louise Heavens

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below