Fund managers unmoved by BOJ announcement

Added 1st August 2016

The Bank of Japan’s unsurprising move last Friday is a relief for banks, but fund managers are not adjusting their portfolios.

Fund managers unmoved by BOJ announcement

Moving against market expectations of “helicopter money”, the BOJ has kept the deposit rate unchanged at -0.1%, but announced it would double purchases of equity ETFs to JPY 6trn ($58.6bn).

Head of the central bank, Haruhiko Kuroda, left the door open for further monetary stimulus.

Hiroyuki Ito, manager of the Fidelity Japan Fund, said no adjustments will be made to the portfolio on the back of this announcement. “Japanese corporate Q1 results are more important to me now than monetary policy.

“The fact that there were no surprises is positive for Japan’s equity markets, he added, while “keeping interest rates unchanged is good news for bank fundamentals.”

Tomoya Masanao, Pimco's head of portfolio management in Japan, based in Tokyo, agrees: “The good news for Japanese financial institutions is not limited to the BOJ’s decision on QE and interest rates.

“The BOJ also said in its statement that the bank would conduct a comprehensive assessment on the effectiveness of its current policy. There is hope that the bank will make a very objective assessment on benefits, costs and risks of its policy and make appropriate adjustments for effectiveness and sustainability.”

Michael Moen, fixed income investment manager for Aberdeen Asset Management Asia, also does not expect any material impact on the firm's portfolios.

“The attention is now on the announcement of the fiscal stimulus package this week, and potentially more radical changes in the BoJ’s monetary policy at the next meeting,” Moen noted.

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