A RM1.7t Japanese wave of cash may be heading overseas


TOKYO • Japanese investors faced the first trading day of a new era yesterday with fresh eyes, but an old problem — where to put their money abroad.

They are expected to receive ¥44 trillion (RM1.67 trillion) in Japanese government bond redemptions in the current fiscal year which started last month, according to JPMorgan Chase & Co strategists Tohru Sasaki and Maoko Ishikawa. With an extended Golden Week holiday out of the way, investors will look to deploy cash overseas and that should weigh on the currency, they said.

“Most Japanese institutional investors refrained from taking their overseas investment positions, entering into a new fiscal year before this long holiday because of concerns over possible sharp yen appreciation,” they said. “Some investors may want to wait and see developments in trade talks between the US and China, but most of them may not be able to wait and may start selling yen sooner than later.”

Japanese markets reopened yesterday after an extended holiday, which included the May 1 ascension of Emperor Naruhito to the Chrysanthemum Throne. Stocks fell and bonds rose as traders reacted to renewed US-China trade tensions, and the near 1% appreciation in the yen since April 26 to 110.64 per dollar.

While a further breakdown in trade negotiations may become a major risk for JPMorgan’s bearish yen view, the strategists continue to see the currency remaining under pressure.

“We continue to believe the yen will remain weak unless the trade talks end with a disastrous result for the global economy,” they said. “We continue to think the US dollar/yen will appreciate to 114s in coming months.” — Bloomberg