Meiji Yasuda Life Insurance Co., Japan’s third-largest life insurer, said it will boost yen-denominated bond holdings in the fiscal second half, while reducing investments in local stocks.
Domestic bond holdings will rise from 14 trillion yen ($182 billion) at the end of September, said Yasuharu Takamatsu, deputy president and head of investments, outlining its fiscal second-half plan. The insurer plans to increase yen-denominated bonds by about 2 trillion yen for the entire fiscal year ending March 2012, he said.
Meiji Yasuda is sticking to the relative safety of debt after increasing its investment in domestic bonds by 1.36 trillion yen in the fiscal first half. The plan comes on concerns the global economy will remain weak amid Europe’s sovereign debt crisis and as Japan copes with the aftermath of the earthquake in March.
“Yen-denominated bonds will continue to be our core investments,” Takamatsu said at a press conference in Tokyo today. “We will continue with our efforts to balance assets and liabilities and lengthen our durations.”
Japan’s sovereign bonds earned 2.4 percent in the fiscal first half ended Sept. 30, according to Bank of America Corp.’s Merrill Lynch index. The Nikkei 225 Stock Average slumped 11 percent.
Among other asset classes, Meiji Yasuda plans to increase overseas stocks and bond holdings. Loans to companies will decline in the second half, the insurer said. It also plans to decrease holdings in alternative investments such as hedge funds by redeeming funds that underperform, he said.
Meiji Yasuda has about 130 billion yen worth of sovereign debt of European nations whose credit ratings were cut, such as Portugal, Ireland, Italy, Greece and Spain. It hasn’t made any allocation changes, the insurer said.
Following are Meiji Yasuda’s market trading range forecasts for the fiscal second half through March 2012.
Range March-End ------------------------------------------------------------- Japan 10-year bond yields: 0.85% - 1.30% 1.2% Japan short-term rates: 0% - 0.10% 0 - 0.1% U.S. 10-year note yields: 1.6% - 2.8% 2.2% U.S. Fed Fund Rate: 0% - 0.25% 0 - 0.25% Yen against the dollar: 76 - 84 80 Yen against the euro: 95 - 115 110 Nikkei 225 Stock Average: 8,000 - 11,000 10,750 Dow Jones Industrial Average: 9,500 - 13,000 12,000