Japan REITs Clouded By Uncertainty Over Post-Kuroda BOJ (NIkkei Asia)
July 5, 2022 – Foreign investors are starting to shun Japanese real estate investment trusts, bracing for a change in the ultraloose monetary policy that has underpinned the market as Bank of Japan Gov. Haruhiko Kuroda nears the end of his term in April.
The Tokyo Stock Exchange REIT Index was down 5% at Thursday’s close from the end of 2021, less than the average decline of 21% for equivalent indexes in other advanced economies over the same period.
The difference comes down to the BOJ’s yield curve control policy, which seeks to cap the yield on benchmark 10-year government bonds at 0.25% — well below long-term Treasury yields in the U.S., which recently climbed above 3%. REITs are sensitive to higher rates, which has raised concerns about the market amid uncertainty over the central bank’s policy path.
While on a trip to Singapore during the BOJ’s June policy board meeting, Atsuro Takemura at Morgan Stanley MUFG Securities was repeatedly posed the same question by foreign investors. With the yen’s sharp depreciation starting to become a political issue, they asked, was it only a matter of time before the BOJ changed course on yield curve control?
Though the bank opted to stand pat, Takemura said that even after he returned to Japan, “there wasn’t any talk about buying more” on the news when he spoke with these traders again.
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