Japan’s overseas bond buying on rise

Dhaka,  Fri,  21 July 2017
Published : 12 Jul 2017, 14:49:23 | Updated : 12 Jul 2017, 15:41:47
printer

Japan’s overseas bond buying on rise

To a Japanese bond investor, the world truly is flat. Not only in the sense that they can invest around the world at the click of a button, but that the choices available to them have become extremely compressed.

For instance, benchmark bond yields in the US, UK, and Germany are some distance apart, a reflection of their different economic trajectories and central bank policies, reports on global media Wednesday.

Yet, for a buyer in Japan, once the cost of including currency movements is calculated, a 10-year UK gilt offers a hedged annual yield of 0.8 per cent, according to Nomura, more than the 0.71 per cent available from US Treasuries.

Viewed from this angle, German Bunds represent a very slightly better option, with a hedged yield of 0.83 per cent.

The compression points to the importance of Japan’s capital to the rest of the world. A rich country with a large population of elderly savers, it was also the first to embrace quantitative easing-like policies in 2001. With interest rates close to zero for many years, a lot of money heads overseas.

Evidence of renewed buying this week came as the Bank of Japan signalled a commitment not to let benchmark Japanese yields rise above 0.1 per cent, meaning that domestic investors must continue to venture abroad to seek a better fixed-rate return.

- SZ
ADDRESS
Editor : A.H.M Moazzem Hossain
Published by the Editor for International Publications Limited from Tropicana Tower (4th floor), 45, Topkhana Road, GPO Box : 2526 Dhaka- 1000 and printed by him from City Publishing House Ltd., 1 RK Mission Road, Dhaka-1000.
Telephone : PABX : 9553550 (Hunting), 9513814, 7172017 and 7172012 Fax : 880-2-9567049
Email : editor@thefinancialexpress-bd.com, fexpress68@gmail.com
Copyright © 2017. All rights reserved
Powered by : orangebdlogo
close