Japan Lifer Plans don’t signal a big investment shift so far; Weekly MoF data eyed
USDJPY fell from 98.00 to below 96.00 in early Asian session. However, spot has already recovered all its losses. We think Thursday’s weekly MoF capital transactions report will be extremely important as the market looks for any evidence of outflows from Japan increasing after the BoJ easing earlier this month. Following from Mitsui life yesterday, another insurer Daido Life also said it plans to slow the pace of JGB purchases this fiscal year, and also will invest in foreign bonds- mainly specifying US, German, French and UK debt as potential options. Daido indicated no plans to reduce its hedge ratio from 70% last year. Like Mitsui Life, there was no plan to increase exposure to Japanese equities. Meanwhile, we would expect the G20 meeting on Friday to re-affirm the February commitment to refrain from competitive devaluation. This would be largely a non-event. We stick with our bullish AUDJPY view after establishing a long trade recommendation last week.
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