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--Sumitomo Life: To Up Unhedged Foreign Bonds If Yen Rises
--Sumitomo Life: To Restrict Investment in Super Long JGBs
--Sumitomo Life: But To Buy 30-Yr JGBs If Yield Rise to 1.5%
TOKYO (MNI) - Sumitomo Life Insurance plans to further increase the balance
of its foreign bond holdings in the October-March period after increasing the
balance by Y310 billion (Y150 billion for bonds and Y160 billion for stocks) in
the April-September period, the company's chief fund manager said Friday.
As for hedged foreign bond investments, the company is more focused on euro
and Australian bonds than U.S. government bonds, as dollar hedging costs are
rising. However, the group is also focused on corporate bonds in the U.S. and
Europe, Toshio Fujimura, general manager of Investment Planning Department at
Sumitomo Life, told reporters.
Fujimura added that the company stands ready to buy unhedged foreign bonds,
when the dollar-yen exchange rate trades below Y110, in the lower half of
Sumitomo's expected Y110 of Y120 range.
The company has increased investments in unhedged foreign bonds for the
April-September period, while selling hedged foreign bonds when the dollar fell
to Y110 level during the period.
--CAUTION OVER JGBS
The company will continue to restrict investment in domestic bonds,
especially super long-term bonds, as yen bond yields are expected to stay at low
levels, after increasing the balance of public and corporate bonds by Y140
billion to Y13.19 trillion, or 41.9% of its total asset, during the first half
of this fiscal year.
However, the company will consider increasing investment in 30- and 40-year
JGBs, if their yields rise (30-year bond yield near 1.5%), he said.
Fujimoto expects the balance of domestic bonds to be flat for the
October-March period but the balance to rise, if yen bond yields rose.
Fujimura expects the 10-year JGB yield to move between 0.00% and 0.25% in
the October-March period and the U.S. Treasury 10-year yield to move in a range
of 2.60% to 3.50%.
Japan's fourth largest life insurer by assets raised its holdings of
foreign bonds (including corporate bonds) by Y310 billion to Y10.4 trillion, or
33.1% of its total assets, for the April-September period.
Fujimura expects new assets from insurance premiums in the second half of
this fiscal year to be about Y500 billion, although it fluctuates, depending on
sales of insurance products, compared with about Y740 billion, including funding
through repo markets, in the April-September period.
The company expects the dollar to trade between Y100 and Y120 and the euro
to move in a range of Y120 to Y145 for the six months to March 31, 2019.
Life insurance firms favor long-term yen assets that match their long-term
yen liabilities. They consider investments in hedged foreign bonds as an
alternative to yen bond holdings.
At the end of September, Sumitomo Life's assets totaled Y31.45 trillion, up
Y740 billion from the end of March.
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