Mitsui Life Insurance plans to increase its bond holdings by 30 to 40 billion yen ($380-$507 million) in the six months to March and continue reducing its Japanese equities exposure, sticking to a conservative investment strategy, a company executive said on Wednesday.
Mitsui, Japan's fifth-largest life insurer with assets under management of 6.5 trillion yen, will seek chances to buy bonds as it expects US and Japanese yields to edge up this quarter with global monetary easing offsetting the effect of a slowing world economy.
The company did not specify how much it would buy in domestic and foreign bonds in the second half of the fiscal year to March, though it said it had increased its holdings of foreign bonds and cut those of domestic bonds in the first half.
"Bond yields likely hit a bottom in the summer and will probably rise in the current quarter," Akihiro Fujioka, head of investment planning at Mitsui, told Reuters in an interview. "We would like to buy when that happens," he said.
Fujioka said the outlook for the following quarters was less certain due to the looming US "fiscal cliff" of spending cuts and tax hikes set to take hold early next year, while the impact of monetary easing could also fade.
"Monetary easing is essentially just about buying time, not a solution to the fiscal problem. To solve it, you need growth. If you just have austerity measures, you might have more bad debts and the economy will just go down," Fujioka said.
"We will probably increase bonds by perhaps 30-40 billion yen. It will probably stop short of 50 billion yen," he said.
As of March, Mitsui's bond portfolio consisted of about 2.92 trillion yen in domestic bonds and about 450 billion yen in fully currency-hedged foreign bonds.
Fujioka said the company had no plans to reduce currency hedging on foreign bonds because near-zero US and European short-term interest rates mean the cost of hedging is low.
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