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Japan investors remain bullish on equities

TOKYO: Major Japanese investors remain bullish on equities and plan to raise the weighting of Japanese stocks in their portfolios in March, the seventh consecutive monthly increase, a Reuters survey showed on Tuesday.

The monthly Global Asset Allocation survey asked 11 Japan-based financial institutions in mid-February about their investment strategies for March.

Their average equities portfolio weighting is expected to drop slightly to 52.43 percent in March from 54.04 percent in the previous month's survey, but will exceed 50 percent for the fourth straight month.

"We expect global stock market prices to be rising three months from now, and we plan to buy stocks on dips when the market enters an adjustment phase in the near future," said a strategist at Nomura Securities.

The forecast weighting of US shares, at 37.65 percent in March, continues to exceed that for Japanese and European stocks, given brisk US economic fundamentals, although it fell from the prior survey's 38.10 percent amid worries about further credit tightening.

INVESTORS WARM TO JAPANESE SHARES

The survey showed investors were shifting funds away from US stocks into Japanese shares as concerns mounted that higher interest rates could fuel a slide in US share prices.

Investors raised their average weighting for Japanese shares to 25.62 percent from 25.11 percent in the previous survey, partly because they expected the yen's recent weakness to boost corporate profits in Japan.

Although investors are wary of seasonal factors such as an unwinding of cross-held shares in the run-up to end-March book closings, they also expected steady demand fuelled by new investment trusts and buying by individual investors in Japan.

Their appetite for euro-zone stocks remains fairly stable, with a weighting of 22.86 percent against 22.71 in the previous survey, reflecting better business and economic conditions in Europe.

BOND WEIGHTING CONUNDRUM

The average weighting for bonds rose to 31.67 percent, from 30.00 percent in the previous survey, although investors believe the medium-term outlook for bonds remains bearish due to unstable currency movements and a likely credit tightening in the United States and Europe.

The weighting of Japanese bonds in March is expected at 9.64 percent, down from 9.79 percent. Investors said they were underweighting Japanese bonds because of increased government bond issuance to finance economic stimulus spending and concerns about when the central bank may end its ultra-easy monetary policy.

The euro-zone weighting is expected to remain at 37.79 percent, while the North American weighting is seen rising to 37.43 precent from 36.93 percent in the previous survey.-Reuters