Overseas investors are buying more Japanese Government Bonds (JGBs), though foreign ownership of the market is still relatively low by international standards, suggests the latest data
from the Bank of Japan.
The proportion of JGBs in issue held by foreigners climbed to over 4% in 2005, slightly up on 2004, and well above the 2% low of 2003, though the proportion is still behind the 6.5% reached in 2000.
“It is believed that changes in monetary policy, plus the attractiveness of asset diversification along the short, mid, long dated durations and inflation indexed bonds are partially responsible for the increase as global investors seek to match liabilities over the a number of terms,” explains a spokesman for Mizuho Corporate Bank in Tokyo. “Credit must also be given to regulatory and market updates, which are thought to be a factor, such as making tax exemption less complicated along with other improvements. Lastly, the Ministry of Finance also held JGB investment promotion seminars held in Europe, the United Kingdom, the United States and Asia over the last two-years to heighten awareness of market structural changes that increase opportunities for overseas investors.”