Strategist, Tasiuke Tanaka....>

GLOBAL MARKET/OPINION: Strategist, Tasiuke Tanaka at Deutsche Bank used the

financial reports of 9 major Japanese lifers to calculate that their holdings of

foreign denominated assets (mainly bonds) rose to Y52.9trn at end-Sep from

Y48.4trn at end-Mar. The weak yen and equity rally have flattered the rise.

- To be precise "Dollar-denominated assets came to Y34.0trn (64.4% of total) and

eurodenominated assets to Y9.8trn (18.5%)."

- Deutsche Bank calculated the hedging ratios: for USD, the ratio slipped

slipped slightly to 48.2% from 48.6%. But the decline was more significant for

EUR, dropping to 70.8% from 75.8%. 

- Tanaka notes that hedged dollar assets had begun sliding after the US

Presidential election. He believes "the drop in the hedging ratio for

euro-denominated assets a natural response given the upswing in the EUR/JPY from

Y115 in April to the mid Y134 level in September"

- Looking forward Deutsche writes that as long as the risk-on climate continues

and yields rise "Lifers intend under these conditions to increase their

allocation to unhedged foreign bonds."