JAPAN: Naomi Fink of Bank of Tokyo Mitsubishi UFJ says not to get too
excited about new Japanese investors outflows in fiscal year 2010, which
begins April 1 and says these investors “do not have radical plans to
shift investments in the coming fiscal year.” Life insurance cos, like
banks, remain purchasers of domestic and locally funded foreign debt.
“Lifers however, do see the merits of decreasing hedge ratios, but not
before the Fed shows greater commitment toward an exit strategy and the
US yield curve flattens,” she says. On the FX front, while some lifers
see current levels sub Y90 as a good level to enter into a dollar-yen
long, others wait for a dip closer to Y80. Still others expect a rise
over Y105 before year-end (Dec), “which if due to a rising interest rate
gap, is likely to propel hedge unwinding,” Fink says.