Is A Fire Sale By Japanese Investors Coming?

Japanese funds may liquidate assets following the devastating earthquake, tsunami and nuclear emergency in the country, reports the Guardian. Based on what has happened before, Japan’s investors may sell off holdings ranging from US treasuries to international stocks, the newspaper reports today.

Mohamed El-Erian, chief executive at Pimco, tells the Guardian that Japan’s private investors will likely take their money home. ‘The critical issue is whether the private sector repatriates its capital – a lot of it is held abroad – and I suspect that it will,’ El-Erian says. 

Japanese investment trusts hold $342 bn of overseas assets, with US holdings representing the largest proportion at around $120 bn, according to research from Citigroup quoted in the Guardian.

The worst-hit countries are likely to be places where Japanese investment makes up a large proportion of the overall equity or debt market, says the newspaper. For example, Japanese holdings account for 3 per cent of the free float listed in Hong Kong and 7 per cent of the equity market in Vietnam.

Source: Guardian

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