* Plans to increase both domestic and foreign stock holdings
* To raise foreign bonds overall, cut U.S. Treasuries
* To reduce currency hedging on foreign bonds due to high costs
* Sees brisk economic growth in Apr-Sept
By Yoshiko Mori
TOKYO, April 25 (Reuters) - Japan’s Daido Life Insurance plans to increase its holdings of stocks and foreign bonds in the current financial year to March expecting a solid global economy in the first half, a senior company executive said on Wednesday.
Within foreign bonds, Daido plans to reduce U.S. bonds and cut currency hedge ratio on them because of rising dollar hedge costs, Yoshihiro Okita, executive officer of investment planning, told Reuters in an interview.
“We plan to purchase stock Exchange Traded Funds (ETFs) and index funds with focus on dividends, mostly in the first half of our financial year,” Okita said.
Daido expects the U.S. economy to be strong in the six months to September, but it is cautious about the second half of the year as higher U.S. rates could curb capital spending.
Global growth could be affected too while continued U.S. rate hikes could undermine advantage of high-yield currencies, possibly causing them to fall, he said.
“In the second half, depending on the economy and corporate earnings, we could end up not buying stocks much,” he added.
Daido plans to step up the holdings of foreign bonds. But due to rising dollar hedge costs, the company plans to shift to European bonds and higher-yielding U.S. corporate bonds from U.S. Treasuries.
Daido currently puts currency hedging on about 80 percent of its foreign bond investment, he said.
The investor is considering lowering the hedge ratio when it expects the dollar to strengthen. During the current financial year, Daido expects the dollar to move between 98 and 118 yen and to firm to around 112 yen by next March, compared with 109.20 yen now, Okita said.
In the previous financial year, Daido increased foreign bonds by 200 billion yen ($1.83 billion). In addition, it increased its foreign stocks by 65 billion yen, domestic stocks by 5 billion yen and domestic bonds by 25 billion yen, Okita said.
Daido managed 6.5 trillion yen ($59.55 billion) of funds as of December.
($1 = 109.16 yen)
Writing by Hideyuki Sano; Editing by Vyas Mohan