March 5, 2020 / 6:02 AM / a month ago

Japan's Nissay Asset Management buying Treasuries, Chinese bonds

TOKYO, March 5 (Reuters) - Japan’s Nissay Asset Management Corp is buying more U.S. Treasuries, Chinese government debt, and credit funds because of expectations that the coronavirus outbreak will pressure central banks to ease monetary policy.

Nissay is betting that global markets will experience another sell-off once the economic drag caused by the epidemic shows up in data from China and other countries, Toshinobu Chiba, the company’s chief fixed income portfolio manager, said on Thursday.

Nissay is buying U.S. Treasuries with durations from three to seven years and hedging the currency risk in the forwards market, Chiba said.

The yen is likely to rise against the dollar, because the U.S. Federal Reserve, which surprised investors with a 50 basis point rate cut on Tuesday, has more room to ease policy than the Bank of Japan, Chiba said.

Nissay is also increasing investment in Chinese government bonds as well as extending durations, he said.

In the United States, Nissay is interested in increasing exposure to corporate debt and is trying to buy into newly issued credit funds, according to Chiba.

The emergence of the SARS-CoV-2 coronavirus in China late last year has become a major threat to the global economic outlook, as it has spread to dozens of countries and caused more than 3,000 deaths.

Restrictions on travel and manufacturing aimed at curbing the spread of the virus is causing an economic slowdown that has roiled financial markets.

Nissay Asset Management had 13.01 trillion yen ($121.21 billion) in assets under management at the end of March 2019. ($1 = 107.3300 yen) (Reporting by Stanley White. Editing by Gerry Doyle)

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