Japanese fund managers increased their exposure to North American stocks in October, a month when Wall Street shares marked a succession of record highs, a Reuters poll showed. The survey of five Japan-based fund managers conducted between October 16 and 25 showed respondents on average wanted to allocate 38.0 percent of their overall stock holdings in their model portfolios to North American equities in October, from 25.5 percent in September.
They trimmed their exposure to Japanese stocks to 41.3 percent in October from 43.8 percent in September and reduced euro zone equity holdings to 8.3 percent from 10.8 percent. The Dow, the S&P 500 and the Nasdaq all advanced to record highs this month. "US equities continue to perform strongly on a robust economy, the information technology sector's solid earnings, gradually-paced monetary policy normalisation and tax reform hopes," wrote strategists at Sumitomo Mitsui Asset Management.
"Japanese stocks are now beginning to move in tandem with US stocks." Japan's Nikkei advanced to a 21-year high in October, during which it marked a record 16 straight sessions of gains. The Nikkei has risen 14.8 percent so far this year, and while impressive, the Dow has gained even more, advancing 18.4 percent The respondents cut Asia excluding Japan stocks to 4.2 percent from 9.2 percent. Their total exposure to stocks was at 37.3 percent in October, unchanged from September.
The fund managers slightly increased the weighting of their overall bond holdings to 57.5 percent in October from 57.3 percent in September. They raised their exposure to North American bonds to 38.1 percent from 32.3 percent. US yields have risen this month, with the benchmark 10-year Treasury yield climbing to a seven-month high on improving investor risk appetite and expectations for the Federal Reserve to hike interest rates in December.
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