Japan fund managers trim stock holdings in September, keep bonds steady

Japanese fund managers trimmed their exposure to stocks and kept their bond holdings steady in September, a Reuters poll showed, during a month punctuated by geopolitical risks. The survey of five Japan-based fund managers conducted between September 15 and 26 showed respondents on average wanted to allocate 37.3 percent of their model portfolios to stocks in September, down from 38.3 percent in August.
"Steadfast economic conditions, both at home and abroad, should support corporate earnings through the year. But the equity markets currently appear overly optimistic and we could see them face adjustments on political events and geopolitical risks going forward," said Yuichi Kodama, chief economist at Meiji Yasuda Insurance. The respondents trimmed their exposure to North American stocks to 25.5 percent in September from 28.0 percent in August.
Wall Street bourses hit a series of record highs in September before pulling back slightly on factors including mounting tensions between the United States and North Korea and the prospect of the Federal Reserve raising rates in December. The respondents kept their holdings of euro zone and Japanese stocks unchanged in September at 10.8 percent and 43.8 percent, respectively.
They increased Asia excluding Japan stocks to 9.2 percent in September from 6.7 percent in August. MSCI's broadest index of Asia-Pacific shares outside Japan rose to its highest since 2007 on September 19. The fund managers kept their overall bond holdings at 57.3 percent in September, unchanged from August.
They shaved their North American debt exposure to 32.3 percent from 32.7 percent and reduced Japanese bond holdings to 33.2 percent from 38.9 percent. The 10-year Japanese government bond yield fell to a 10-month low of minus 0.015 percent early in September on North Korea concerns. But it pulled sharply back to 0.040 percent later in the month as US Treasury yields climbed on expectations that the Fed would tighten its policy in December. The respondents kept their euro zone bond holdings for September unchanged at 19.8 percent.