Japanese fund managers increased their overall exposure to stocks in their model portfolios in December while reducing bond holdings, a Reuters poll showed. Respondents on average allocated 49.7 percent of their portfolios to equities in December, compared with 37.7 percent in November. The broader equity market has enjoyed a boon in December, supported by continuing global economic growth, upbeat corporate earnings and likelihood of the Federal Reserve sticking to a gradual pace of interest rate increases.
The respondents lifted their North American stock holdings to 35.5 percent in December from 30.5 percent in November. Wall Street indexes reached record highs in December on hopes that US tax cuts would stimulate the economy. They increased their Japanese stock exposure to 48.8 percent in December from 46.3 percent in November. "The equity market looks to remain on a steady footing, with domestic manufacturers leading the way by posting large profits this period," said Yuichi Kodama, chief economist at Meiji Yasuda Insurance.
The respondents increased their holdings in Asia excluding Japan equities to 14.2 percent from 6.7 percent while reducing euro zone stock exposure to 0.8 percent from 8.3 percent. MSCI's broadest index of Asia-Pacific shares outside Japan has gained 5.5 percent so far this quarter, while the pan-European STOXX 600 has risen 2.5 percent, having lost some momentum after peaking at a two-year high early in November.
The fund managers reduced their overall bond holdings to 42.9 percent in December from 56.9 percent in November. They cut their North American bond exposure to 19.7 percent in December from 33.0 percent in November. They reduced Japan bonds to 26.6 percent from 36.6 percent and trimmed euro zone bond exposure to 13.8 percent from 22.8 percent.
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