Dai-ichi Life accelerates pace of purchases to top 2.5% in 2030 – Picks up ultra-long-term bonds in second half

Daiichi Life Insuranceplans to increase ultra-term investments in the second half of fiscal 2024, continuing from the first half. Kohei Horikawa, Director of Operations Planning, made this announcement at an operations briefing session on the 29th.

Regarding investment in ultra-term bonds in the second half, Horikawa said, “We will continue to buy a certain amount of cash” to reduce interest rate risk. If the yield on 30-year bonds, the main investment target, is above 2.5%, he says, “we will consider bringing forward future investments and increasing the pace of accumulation.”

The Bank of Japan is expected to raise interest rates once this year or at the beginning of the year, and then roughly once a year thereafter. The 10-year interest rate is expected to be 1.2% at the end of the fiscal year, with a range of 0.7% to 1.5%. In terms of ultra-duration bonds, we will invest mainly in 30-year and 40-year bonds, and we predict that the yield on 30-year bonds will be 2.3% at the end of the fiscal year , with a range of 1.7-2.7%.

Regarding the current upward movement in interest rates over time, “Interest rates are rising due to speculation that the ruling party will lose seats in the House of Representatives election and that there are increasing chances of fiscal stimulus to act as part of a coalition or joint struggle”.

The US is expected to cut interest rates twice this year, and once a quarter thereafter. A soft landing is the key scenario for the US economy, with the dollar-yen exchange rate gradually appreciating due to a narrowing of the domestic and foreign interest rate differential, and expected to reach 140 yen to the dollar by the end of the fiscal year.

Regarding hedged foreign bonds, Horikawa explained, “The balance has been reduced significantly in recent years, and is now well below 1 trillion yen.” now, and in the second half, the balance will be adjusted flexibly according to interest rates and exchange rate movements.

[Plana gnìomh Dai-ichi Life airson an dàrna leth de FY2014]

An increase in bonds to cover more policy reserves for domestic bondsDepending on the interest rate of foreign bonds with hedges, be flexible based on the movements of domestic and foreign interest rates.Open foreign bonds Flexible according to risk tolerance and exchange rate according to exchange rateSelling to control the risk of decline in domestic stocks, etc.Flexible depending on risk tolerance and stock price level according to foreign stock price levelOther options increase the investment of selective hedge funds. Strengthen real asset investments such as buyout funds, venture funds, and infrastructure funds. Focus on private debt

[Sealladh àrainneachd ionmhais: sealladh agus raon measta aig deireadh a’ Mhàirt 2025]

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