Japanese life insurers’ voracious appetite for assets overseas is proving to be a formidable obstacle for yen bulls.
The ratio of foreign securities to total assets for the nation’s life-insurance companies rose to 22% at the end of the last quarter, data from the Bank of Japan showed on Thursday. The yen slipped 4% against the dollar in the period, the most since 2016, even as global trade tensions and emerging-market turmoil were expected to have bolstered demand given the currency’s traditional safe-haven status.
“The rising outward investment from Japan is a reason why the yen hasn’t strengthened even when there was bad news for the markets,” said Ayako Sera, a strategist at Sumitomo Mitsui Trust Bank Ltd. in Tokyo. “Japanese investors have no choice but to go abroad to benefit from faster growth rates.”