Record Chinese net buying of Japan debt
Source: Bloomberg News |
June 9, 2011, Thursday
|
Print Edition
Print Edition
CHINA'S net purchases of Japan's long-term debt reached a record as Beijing seeks to diversify the world's biggest currency reserves.
China bought a net 1.33 trillion yen (US$16.6 billion) in Japanese long-term bonds in April, the biggest amount since records began in January 2005, according to data released yesterday by Japan's Ministry of Finance. The nation sold a net 1.47 trillion yen of short-term debt, the data showed.
"As China tries to diversify its assets with its huge foreign-exchange reserves, it probably wants to have yen-denominated assets to some extent" in the longer term, said Tetsuya Inoue, chief researcher for financial markets for Tokyo-based Nomura Research Institute Ltd. "China has a strong trading relationship with Japan."
China's net buying of Japan's long-term debt exceeded the previous record of 234.5 billion yen set in March. International investors boosted their holdings of Japan's longer-term bonds for a sixth week, the longest run since August, ministry data released on June 2 showed.
Japanese government debt due in 10 years and longer has handed investors a 2.2 percent gain since the start of April, versus a 1 percent rise for the broad market, based on Bank of America Merrill Lynch data. The Nikkei 225 Stock Average has fallen 3.1 percent over the same period.
"Adding to diversification of its foreign reserves, China may have bought mid- to long-term on bets Japan's interest rates will remain low because of the impact from the earthquake," said Makoto Noji, a senior bond and currency strategist in Tokyo at SMBC Nikko Securities Inc, one of 24 dealers obliged to bid at government debt sales.
Japan's economy shrank 3.7 percent in the first quarter after the magnitude-9 earthquake and tsunami on March 11 disrupted output and forced consumers to cut back spending.
China bought a net 1.33 trillion yen (US$16.6 billion) in Japanese long-term bonds in April, the biggest amount since records began in January 2005, according to data released yesterday by Japan's Ministry of Finance. The nation sold a net 1.47 trillion yen of short-term debt, the data showed.
"As China tries to diversify its assets with its huge foreign-exchange reserves, it probably wants to have yen-denominated assets to some extent" in the longer term, said Tetsuya Inoue, chief researcher for financial markets for Tokyo-based Nomura Research Institute Ltd. "China has a strong trading relationship with Japan."
China's net buying of Japan's long-term debt exceeded the previous record of 234.5 billion yen set in March. International investors boosted their holdings of Japan's longer-term bonds for a sixth week, the longest run since August, ministry data released on June 2 showed.
Japanese government debt due in 10 years and longer has handed investors a 2.2 percent gain since the start of April, versus a 1 percent rise for the broad market, based on Bank of America Merrill Lynch data. The Nikkei 225 Stock Average has fallen 3.1 percent over the same period.
"Adding to diversification of its foreign reserves, China may have bought mid- to long-term on bets Japan's interest rates will remain low because of the impact from the earthquake," said Makoto Noji, a senior bond and currency strategist in Tokyo at SMBC Nikko Securities Inc, one of 24 dealers obliged to bid at government debt sales.
Japan's economy shrank 3.7 percent in the first quarter after the magnitude-9 earthquake and tsunami on March 11 disrupted output and forced consumers to cut back spending.
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