Norinchukin Says It Will Be Cautious About Investing in JGBs
The firm expects further rate hikes in Japan, Chief Financial Officer Masaki Nagano said at a briefing. His remarks come amid a rout in the country's $7.8 trillion government bond market this week.
Norinchukin's stance echoes other investors who are scrutinizing the fiscal health of countries from the US to Japan. Yields on US Treasuries are soaring as lawmakers debate a tax cut bill, while Japanese long-term debt has been sold off as the central bank pares its holdings in the face of emerging inflation.
Nochu, as the firm is known, sold ¥17.3 trillion worth of so-called low-yielding assets made up of US and European government bonds as well as investment grade corporate bonds, a presentation showed. The company had ¥1.24 trillion of unrealized losses on bonds at the end of March compared with ¥2.2 trillion a year earlier.
The agricultural lender reported a ¥1.8 trillion loss for the year ended in March, from a profit of ¥63.6 billion a year ago as it dumped billions worth of Treasuries and other foreign bonds. Nochu expects profit of between ¥30 billion to ¥70 billion for the current fiscal year, according to the presentation, sticking to a previous estimate.
Buyers Recoil From Japanese Bonds in Warning on BOJ Tapering
The Tokyo-based bank became one of the most prominent victims of a surge in US interest rates, which drove down the value of its foreign bond holdings, while a jump in dollar-funding costs outweighed returns from these securities. Its massive losses are a stark reminder of the risks posed by otherwise safe-haven assets like Treasuries and other sovereign bonds in time of macro-economic stresses.
The bank is trying to rebuild its ¥40.3 trillion securities portfolio under new Chief Executive Officer Taro Kitabayashi, who took over the reins in April after his predecessor Kazuto Oku resigned to take responsibility for last fiscal year's losses. Kitabayashi, who has worked at the bank since 1994, was chief financial officer until the end of March.
Kitabayashi is looking at a wide range of other investment assets, as he seeks to bring in non-rates assets to the portfolio. The company is investing in bonds, credit and alternative assets, CFO Nagano said at the briefing.
The bank's holdings of collateralized loan obligations stood at ¥8.3 trillion as at the end of March, from ¥8.2 trillion three months earlier, as a result of new investments and the currency factor. This accounted for 20% of its portfolio.
--With assistance from Takashi Nakamichi and Russell Ward.
More stories like this are available on bloomberg.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
an hour ago
- The Hindu
Accenture to buy Australian cybersecurity firm CyberCX for reported $650 million
Accenture said on Thursday it will buy Australian cybersecurity firm CyberCX in its largest-ever deal in the sector, with the Australian Financial Review valuing the transaction at more than A$1 billion ($650 million). A wave of devastating cyberattacks has battered Australia, including a 2022 breach at telecom major Optus that exposed the personal data of up to 10 million users, and a hack on health insurer Medibank affecting nearly 10 million customers. In July, Qantas Airways disclosed that criminals had infiltrated one of its call centres, accessing personal information of six million customers. Private equity firm BGH Capital, which is selling CyberCX, has not disclosed any financial terms. Accenture declined to provide additional details, while BGH Capital didn't respond to Reuters' requests for comment on the reported valuation. The deal underscores the surging demand for advanced digital security services as businesses worldwide face increasingly sophisticated cyber threats that disrupt operations and compromise sensitive data. Melbourne-based CyberCX was formed in 2019 through the merger of 12 smaller cybersecurity firms backed by BGH Capital. The company now employs about 1,400 people and runs security operations centres across Australia and New Zealand, with offices in London and New York. CyberCX is led by John Paitaridis, formerly managing director of Optus Business, and Chief Strategy Officer Alastair MacGibbon, Australia's former national cybersecurity coordinator. The leadership's ties to Optus are notable, given the telecommunications company's 2022 data breach, which exposed names, birth dates, addresses, phone numbers, email contacts and passport and driver's license numbers. Since 2015, Accenture has completed 20 security acquisitions, including recent purchases of Brazilian cyber defense firm Morphus, MNEMO Mexico and Spain-based Innotec Security. On the domestic front, the firm entered into a $700 million collaborative agreement with Telstra in February, aiming to implement AI capabilities across the telecommunications company.
Economic Times
an hour ago
- Economic Times
World equities flat, crude oil prices fall as Trump, Putin hold high-stakes talks
Global stock markets remained stable near record highs on Friday. Donald Trump and Vladimir Putin met in Alaska to discuss Ukraine. US Treasury bond prices declined amid expectations of a Federal Reserve rate cut. The Dow reached a new intraday high. European shares saw a slight pullback after nearing a five-month high. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Global stocks were flat but still traded near record highs on Friday as U.S. President Donald Trump and his Russian counterpart Vladimir Putin held high-stakes talks in Alaska over Ukraine.U.S. Treasury bond prices fell across the board with markets anticipating a Federal Reserve interest rate Dow hit an intra-day record high during the session, becoming the last of Wall Street's main indexes to climb to a new peak this week. The benchmark S&P 500 and the Nasdaq dropped, dragged down mainly by technology, financials, industrials and utilities stocks. The Dow Jones Industrial Average rose 0.08%, the S&P 500 fell 0.29% and the Nasdaq Composite fell 0.40%."This market continues to move higher and the story is just earnings and margins," said Talley Leger, chief market strategist at The Wealth Consulting Group in New Jersey."The inflation numbers that we saw this week were mostly services and in a services-based economy like ours, this is good for profit margins." Data showed that U.S. retail sales increased solidly in July, rising 0.5% from the prior month, after an unexpected spike in producer price data on Thursday renewed inflation concerns and pared market expectations for Federal Reserve rate cuts this shares touched a near five-month high before pulling back, as investors drew encouragement from a largely positive earnings season. The pan-European STOXX 600 index finished flat at 0.06%. The MSCI All Country World Index consolidated recent gains. It was last flat at 951.70, just shy of the record level of 954.21 set on Wednesday. Trump and Putin met face to face in Alaska in a high-stakes meeting that could determine whether a ceasefire can be reached in the deadliest war in Europe since World War has said a second summit involving Ukrainian President Volodymyr Zelenskiy could follow if the talks with Putin go well. Details and the longevity of any agreement will be key, and for now investors are on standby. Ukraine's government bonds - key indicators of the mood - have largely stalled in recent days at a still-distressed 55 cents on the dollar."There's still a small degree of risk premium in European markets because of the war. Any type of resolution will ultimately pare that back," said Shaniel Ramjee, co-head of multi-asset at Pictet Asset Management, adding that oil and other commodity prices could also react. "But I think that the market has learnt not to expect too much from these negotiations. Ultimately, Zelenskiy and the Europeans are not invited. They will need to be involved in any final negotiation," Ramjee added. The two-year note yield, which typically moves in step with interest rate expectations for the Fed, rose 1.1 basis points to 3.751%, paring earlier losses. The yield on benchmark U.S. 10-year notes rose 2.7 basis points to 4.32%. In currency markets, the dollar weakened 0.38% to 146.72 against the Japanese yen and was down 0.15% at 0.806 against the Swiss franc. The euro was up 0.48% at $ dollar index, which tracks the greenback against a basket of six major currencies, was last trading down 0.34% at 97.85. Japanese GDP data released on Friday showed the economy expanding by an annualised 1.0% in the April-to-June quarter, beating analyst crude fell 1.5% to settle at $66.85 per barrel. U.S. crude fell 1.8% to settle at $ gold rose 0.09% to $3,338.65 an ounce. U.S. gold futures settled almost flat at $3,382.60. Cryptocurrency markets stabilised after bitcoin touched a record $124,480.82 on Thursday. It was down 0.78% at $117,033.52.
Economic Times
an hour ago
- Economic Times
Dollar eases as data keep September rate cut on track; eyes on Trump-Putin meeting
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel The dollar slipped on Friday as a data-heavy week wound down, keeping the case for a September Federal Reserve interest rate cut intact, while traders awaited talks in Alaska between U.S. President Donald Trump and Russian leader Vladimir Putin regarding dollar, which had jumped on Thursday as data showed U.S. producer prices increased more than expected in July, gave up most of those gains on Friday, and was set to finish the week 0.4% lower against a basket of currencies."The PPI figure yesterday was a shock, but there is still little concrete evidence for a tariff-driven spike in inflation," Kyle Chapman, forex markets analyst at Ballinger & Co in London, said."With markets staying firm on their bets for a September cut and the focus now shifting to Alaska, the dollar is handing back its gains this morning," Chapman markets reflect a 93% chance of a 25-basis-point Fed rate cut in September, according to CME FedWatch.A Fed interest rate cut in September, the first this year, followed perhaps by another before year-end, remains the base forecast for most economists polled by Reuters amid rising concerns about the health of the world's biggest Federal Reserve Bank President Austan Goolsbee on Friday said the latest reports this week showing a rise in services inflation are a source of "unease" given what he sees as the stagflationary impulse from tariffs on the Friday, investors were also watching to see if the Trump-Putin summit made any progress towards a ceasefire in Ukraine."While anything could happen at the meeting between Trump and Putin, I think expectations are low for progress towards a lasting ceasefire and that tilts the risks towards a softer dollar if the market is pleasantly surprised," Ballinger's Chapman analysts expect Europe's single currency to benefit from any ceasefire deal in Ukraine. The euro was 0.5% higher at $1.1702 versus the dollar found little support on Friday from data that showed U.S. import prices rebounded in July, boosted by higher costs for consumer U.S. retail sales increased solidly in July, boosted by strong demand for motor vehicles as well as promotions by Amazon and also await next week's Jackson Hole symposium for clues on the Fed's next move. Signs of weakness in the U.S. labour market combined with any inflation from trade tariffs could present a dilemma for the Fed's rate cut trajectory."While there are more Fed officials talking about resuming rate cuts, (Fed Chair Jerome) Powell may try to temper expectations about when and how much they'll cut," Brian Jacobsen, chief economist at Annex Wealth Management, said in a the yen, the dollar was 0.4% lower at 147.23 yen, following the release of surprisingly strong Japanese growth data, which showed export volumes held up well against new U.S. tariffs.U.S. Treasury Secretary Scott Bessent's remarks earlier this week that the Bank of Japan could be "behind the curve" in dealing with the risk of inflation proved to be another tailwind for the yen this rose against a weakening dollar on Friday and was set to end the week higher after upbeat economic data and a hawkish rate cut by the Bank of England. The pound was last up 0.2% at $1.35520, taking its gains for the week to 0.7%.Elsewhere, bitcoin was about unchanged on the day at $117,126. Bitcoin had at one point touched a record high on Thursday as increasing expectations for easier monetary policy from the Fed added to optimism stemming from a pro-crypto regulatory environment in Washington.
