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Dai-ichi Life to raise yen bond investments, cut domestic stocks in 2020/21

Published 22/04/2020, 04:00 pm
© Reuters.
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By Tomo Uetake

SYDNEY, April 22 (Reuters) - Japan's Dai-ichi Life Insurance plans to invest more in yen bonds, including Japanese government bonds, and reduce domestic stock holdings over the next year with an aim to reduce risks, a senior investment planning official said on Wednesday.

"In our view, the coronavirus lockdown has already sent the global economy into a recession, deeper than that following the 2008 financial crisis," said Akifumi Kai, general manager of investment planning at Dai-ichi, the second-biggest private life insurer in Japan.

Global share prices plunged last month on fears over the economic fallout from the COVID-19 pandemic. Government bond yields have also slumped to record levels in the United States and other countries as central banks slashed interest rates to shield their economies from the impact.

Dai-ichi Life Insurance, the core company of Dai-ichi Life Holdings 8750.T , had total assets of 37.3 trillion yen ($347 billion), as of last December.

In its investment plan for the current year to March 2021, Dai-ichi Life stopped short of telling whether the insurer plans to add or reduce the holdings of foreign bonds and international stocks, merely saying that it depends on currency and interest rate levels.

"If we see signs that a U-shaped recovery is on the horizon, as our base-case scenario suggests, we may turn more positive towards risk assets. But even so, we can't say anything definite at this point as we expect uncertainty to remain high," Kai said.

Within the currency-hedged foreign debt space, the general manager said the Canadian dollar and the euro look more attractive on a total return basis, rather than the U.S. dollar, despite a sharp decline in dollar hedge costs in recent weeks.

The Japanese insurer also plans to continue adding alternative assets, including hedge funds, private equities and real estates, over the next year.

($1 = 107.6100 yen)

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