New Whale Seen Moving Tokyo Markets as Japan Post Sells Bonds
2015-09-02 01:40:59.603 GMT
By Anna Kitanaka and Shigeki Nozawa
(Bloomberg) -- As the world’s biggest pension fund nears
the end of its switch from sovereign bonds into stocks,
investors are looking at Japan Post Bank Co. as the next actor
big enough to move markets.
The postal lender, the biggest holder of Japanese
government bonds after the central bank, sold 5.1 trillion yen
($42 billion) in JGBs in the three months ended June, after
offloading a record amount of the debt last fiscal year. The
$1.2 trillion Government Pension Investment Fund, known as the
whale, said last week stock and fixed-income holdings were all
within 3 percentage points of their targets, suggesting it has
almost completed a planned shift into riskier assets including
global bonds and shares.
The Bank of Japan needs to find about 45 trillion yen in
JGBs from the market to meet its annual goal for boosting money
supply to stimulate the economy. Japan Post Bank, with 49.2
percent of its 206.5 trillion yen held in domestic debt, fits
the profile and needs to seek higher profits ahead of a possible
public share sale this year.
“It wouldn’t be a surprise to see Japan Post Bank do to
their portfolio what GPIF did to theirs,” said Yoshinori
Shigemi, a global market strategist in Tokyo at JPMorgan Asset
Management. “It’s important for both investors and the
government that the bank enhance its corporate value and show
that profits are going to grow by aggressively reshaping its
portfolio ahead of its listing.”
Like GPIF, Japan Post Bank has been reducing its dependency
on domestic government bonds. The bank owned 101.6 trillion yen
in sovereign debt at the end of June, with the ratio falling
below 50 percent of holdings for the first time.
Unlike GPIF, however, Japan Post Bank hasn’t been
increasing domestic stocks. It held just 900 million yen of
local equities at the end of the first quarter, unchanged from
March.
“Among the whales that the market has been focused on, the
GPIF has had the biggest impact,” said Hidenori Suezawa, an
analyst at SMBC Nikko Securities Inc. in Tokyo. “Others have
massive assets, but it may take some time for them to match
GPIF.”
The pension fund reduced domestic bond holdings to 38
percent of its assets at the end of June, down from about 50
percent a year earlier. The fund had 23 percent in Japanese
stocks, up from 17 percent, while international debt made up 13
percent and 22 percent was in equities abroad in June. It
targets 35 percent in JGBs, 25 percent each in domestic and
foreign shares, and 15 percent in overseas notes.
‘Massive Amounts’
“GPIF sold massive amounts of Japanese debt and the BOJ
absorbed it very quickly,” said Shuichi Ohsaki, a rates
strategist at Bank of America Corp.’s Merrill Lynch unit in
Tokyo. “So now that GPIF’s selling has finished, the focus will
be on who else is going to sell. Unless Japan Post Bank sells
JGBs, the BOJ won’t be able to continue its monetary stimulus
operations. It has to sell.”
Japan’s 10-year government bonds yielded 0.39 percent on
Wednesday, down from about 0.5 percent a year earlier. The Topix
index of the country’s shares has risen 14 percent in the past
year, even after a global equity rout sparked a sell-off that
pushed the measure into a correction.
Japan Post Bank saw returns from investments fall 6.3
percent in the three months ended June from a year ago. GPIF
earned 19 percent more in the same period as stocks rose and the
yen weakened, boosting overseas assets.
Asset Diversification
The postal bank said in April it plans to increase
investments in assets aside from JGBs, such as foreign
securities and corporate bonds, by 30 percent to 60 trillion yen
in the fiscal year ending March 2018.
“Japan Post Bank needs to do something to make itself look
attractive with its listing coming up,” said Nicholas Smith, a
strategist at CLSA Ltd. in Tokyo. “The company’s going to be a
lot more valuable if it’s able to get some decent returns. And
with the market on its back at the moment, it seems a very good
time to be doing that.”
For Related News and Information:
Fore the Japan Credit story daily: SALT JNCREDIT
For more credit columns: TOP CM
World equity valuations: WPE
World equity index monitor: WEI
Most-read stock market stories: MNI STK
Biggest movers this year: TPX INDEX MRR 10
Market map of today’s trading: TPX INDEX IMAP
To contact the reporters on this story:
Anna Kitanaka in Tokyo at +81-3-3201-8140 or
akitanaka@bloomberg.net;
Shigeki Nozawa in Tokyo at +81-3-3201-3867 or
snozawa1@bloomberg.net
To contact the editors responsible for this story:
Sarah McDonald at +61-2-9777-8684 or
smcdonald23@bloomberg.net;
Sandy Hendry at +852-2977-6608 or
shendry@bloomberg.net;
Garfield Reynolds at +61-2-9777-8695 or
greynolds1@bloomberg.net
Tomoko Yamazaki, Ken McCallum
2015-09-02 01:40:59.603 GMT
By Anna Kitanaka and Shigeki Nozawa
(Bloomberg) -- As the world’s biggest pension fund nears
the end of its switch from sovereign bonds into stocks,
investors are looking at Japan Post Bank Co. as the next actor
big enough to move markets.
The postal lender, the biggest holder of Japanese
government bonds after the central bank, sold 5.1 trillion yen
($42 billion) in JGBs in the three months ended June, after
offloading a record amount of the debt last fiscal year. The
$1.2 trillion Government Pension Investment Fund, known as the
whale, said last week stock and fixed-income holdings were all
within 3 percentage points of their targets, suggesting it has
almost completed a planned shift into riskier assets including
global bonds and shares.
The Bank of Japan needs to find about 45 trillion yen in
JGBs from the market to meet its annual goal for boosting money
supply to stimulate the economy. Japan Post Bank, with 49.2
percent of its 206.5 trillion yen held in domestic debt, fits
the profile and needs to seek higher profits ahead of a possible
public share sale this year.
“It wouldn’t be a surprise to see Japan Post Bank do to
their portfolio what GPIF did to theirs,” said Yoshinori
Shigemi, a global market strategist in Tokyo at JPMorgan Asset
Management. “It’s important for both investors and the
government that the bank enhance its corporate value and show
that profits are going to grow by aggressively reshaping its
portfolio ahead of its listing.”
Like GPIF, Japan Post Bank has been reducing its dependency
on domestic government bonds. The bank owned 101.6 trillion yen
in sovereign debt at the end of June, with the ratio falling
below 50 percent of holdings for the first time.
Unlike GPIF, however, Japan Post Bank hasn’t been
increasing domestic stocks. It held just 900 million yen of
local equities at the end of the first quarter, unchanged from
March.
“Among the whales that the market has been focused on, the
GPIF has had the biggest impact,” said Hidenori Suezawa, an
analyst at SMBC Nikko Securities Inc. in Tokyo. “Others have
massive assets, but it may take some time for them to match
GPIF.”
The pension fund reduced domestic bond holdings to 38
percent of its assets at the end of June, down from about 50
percent a year earlier. The fund had 23 percent in Japanese
stocks, up from 17 percent, while international debt made up 13
percent and 22 percent was in equities abroad in June. It
targets 35 percent in JGBs, 25 percent each in domestic and
foreign shares, and 15 percent in overseas notes.
‘Massive Amounts’
“GPIF sold massive amounts of Japanese debt and the BOJ
absorbed it very quickly,” said Shuichi Ohsaki, a rates
strategist at Bank of America Corp.’s Merrill Lynch unit in
Tokyo. “So now that GPIF’s selling has finished, the focus will
be on who else is going to sell. Unless Japan Post Bank sells
JGBs, the BOJ won’t be able to continue its monetary stimulus
operations. It has to sell.”
Japan’s 10-year government bonds yielded 0.39 percent on
Wednesday, down from about 0.5 percent a year earlier. The Topix
index of the country’s shares has risen 14 percent in the past
year, even after a global equity rout sparked a sell-off that
pushed the measure into a correction.
Japan Post Bank saw returns from investments fall 6.3
percent in the three months ended June from a year ago. GPIF
earned 19 percent more in the same period as stocks rose and the
yen weakened, boosting overseas assets.
Asset Diversification
The postal bank said in April it plans to increase
investments in assets aside from JGBs, such as foreign
securities and corporate bonds, by 30 percent to 60 trillion yen
in the fiscal year ending March 2018.
“Japan Post Bank needs to do something to make itself look
attractive with its listing coming up,” said Nicholas Smith, a
strategist at CLSA Ltd. in Tokyo. “The company’s going to be a
lot more valuable if it’s able to get some decent returns. And
with the market on its back at the moment, it seems a very good
time to be doing that.”
For Related News and Information:
Fore the Japan Credit story daily: SALT JNCREDIT
For more credit columns: TOP CM
World equity valuations: WPE
World equity index monitor: WEI
Most-read stock market stories: MNI STK
Biggest movers this year: TPX INDEX MRR 10
Market map of today’s trading: TPX INDEX IMAP
To contact the reporters on this story:
Anna Kitanaka in Tokyo at +81-3-3201-8140 or
akitanaka@bloomberg.net;
Shigeki Nozawa in Tokyo at +81-3-3201-3867 or
snozawa1@bloomberg.net
To contact the editors responsible for this story:
Sarah McDonald at +61-2-9777-8684 or
smcdonald23@bloomberg.net;
Sandy Hendry at +852-2977-6608 or
shendry@bloomberg.net;
Garfield Reynolds at +61-2-9777-8695 or
greynolds1@bloomberg.net
Tomoko Yamazaki, Ken McCallum