Japan fund managers raise stock weightings to 1-1/2-year high * Euro zone bond allocation rises to 2-1/2-year high * Investors concerned US political deadlock could return Japanese fund managers increased their assets allocated to equities to a 1-1/2-year high in October on expectations that the U.S. Federal Reserve will not reduce its stimulus in the near future, a Reuters poll showed on Thursday. A survey of eight Japan-based fund managers, polled Oct. 17-23, also found they had raised their allocation to euro zone bonds to a 2-1/2-year high amid signs the euro zone economy is recovering from the damage of its debt crisis. The fund managers raised their overall allocation of assets to shares to 44.2 percent, an 18-month high, in October from 44.0 percent in September. They also increased their bond allocation slightly to 49.0 percent from a 16-month low of 48.9 percent in September. Rising expectations that the Fed will delay reducing its stimulus after the government shutdown are keeping interest rates low and are positive for stocks, said a fund manager at a Japanese asset management firm, who declined to be identified because of company policy. But the improvement in economic sentiment is limited globally so investors buying will concentrate on shares and sectors with good earnings, the fund manager added. Although Federal Reserve Chairman Ben Bernanke had said in May that the Fed could start reducing its $85 billion-a-month bond buying programme later this year, the Fed surprised markets Many market participants think the Fed will delay tapering its stimulus at least until early next year as a 16-day government shutdown this month is likely to have disrupted the U.S. economy. Such expectations helped drive the U.S. Standard and Poors Index to a record high this week. Within their equity portfolios, fund managers raised weightings for the euro zone and emerging European markets while cutting those for most other markets including the United States, Japan and Asia. The equity weighting for the euro zone rose to 10.5 percent from a record low of 8.8 percent in September. As Italian and Spanish bonds are being bought back on receding fears of a debt default, Japanese funds managers are also coming back to bonds in the currency bloc. Their euro zone allocation within bonds rose to 22.4 percent, its highest level since April 2011, from 22.0 percent last month. The euro also hit a four-year high against the yen this month, rising as high as 135.52 yen. Versus the dollar, the common currency hit a two-year high of $1.3833 last month. A shift to the euro zone could partly reflect concerns over U.S. political deadlock. Although U.S. lawmakers agreed on temporary measures to resolve the debt ceiling impasse, analysts are worried that political paralysis could return early next year. Although the U.S. fiscal negotiations were settled temporarily, fundamentally nothing has been resolved and theres great uncertainty, said Yuichi Kodama, chief economist at Meiji Yasuda Life.
Posted on: Thu, 31 Oct 2013 03:41:34 +0000
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