Japan's Mitsui Sumitomo Insurance to invest 40b yen abroad
Japan's Mitsui Sumitomo Insurance plans to invest more than 40 billion yen (HK$309.9 billion) in assets overseas such as bonds and stocks and further cut its domestic stock exposure this financial year, a senior company executive said yesterday.
Japan's Mitsui Sumitomo Insurance plans to invest more than 40 billion yen (HK$309.9 billion) in assets overseas such as bonds and stocks and further cut its domestic stock exposure this financial year, a senior company executive said yesterday.
The core company of MS&AD Insurance Group Holdings is one of Japan's largest property and casualty insurers and had 6.6 trillion yen in assets at the end of December.
While Japanese government bonds (JGBs) account for the largest part of Mitsui Sumitomo's assets, foreign currency-denominated stocks and bonds in developed markets such as the United States make up the bulk of its risk assets, said Hiroaki Hara, manager of investment planning at Mitsui Sumitomo.
The 10-year JGB yield has been staying at relatively low levels of around 0.3 per cent as the Bank of Japan's massive bond-buying programme pulls liquidity from the domestic bond market.
"It's getting more and more difficult to get returns amid low liquidity in the bond market," Hara said. "But we are not going to take risks just because we want to chase high returns."
During the last fiscal year to March, the insurer invested a little more than 40 billion yen in foreign assets and bonds, he said. Mitsui Sumitomo Insurance also plans to cut holdings of domestic stocks as it is in the second year of a four-year plan to reduce such stocks exposure by 300 billion yen. Many Japanese insurers have been slowly unwinding their cross-holdings of shares, recognising the risk they pose to their financial health.
Helped by a recovery in the economy, likely stronger corporate profits and buying by pension funds, he expects the stock market to be supported throughout the year. The yen should stay weak as the US dollar is expected to stay high on bets that the US Federal Reserve will raise interest rates in the coming months.
