From Bloomie:
Japan’s second-biggest bond fund is looking to buy the Australian dollar on dips, predicting a slowdown in China won’t derail the global recovery…Kokusai Asset Management Co. had 1 percent of its Global Sovereign Open Fund invested in Aussie-denominated assets on April 10, down from 4.5 percent at the end of September, data on the company’s website show.
Kokusai is looking to add to its Aussie holdings and is increasing its investments in New Zealand debt. “We don’t think risks in China will have a long-term impact on the global economy,” Masataka Horii, who runs the 1.18 trillion yen ($11.5 billion) fund, said in an April 11 interview in Tokyo. “Because everyone has been overly pessimistic on the Australian dollar amid concerns in emerging markets and China, the risk is skewed for some short-covering.”
“While commodity prices might be impacted by poor China data, we think the volume of exports offsets that to a great degree,” Divya Devesh, a Singapore-based foreign-exchange analyst at Standard Chartered Plc, said in a phone interview yesterday. “As more and more mines in Australia transition from their construction phase to their production phase, the volume of exports is likely to go up.”
…”We have reduced allocations in Australia, but given that the Aussie dollar has been sold off quite aggressively recently, we’re looking to buy dips,” Kokusai’s Horii said. “We are considering increasing our allocations in Australia.”
While the Kokusai Global Sovereign Open Fund has recently reduced Aussie investments, it had previously ramped up allocations to as high as 20.5 percent as of the end of 2012 as Australia benefited from an unprecedented boom in resources investment.
…”The Australian economy is starting to recover as exports pick up and house prices rise,” Horii said. “The headline numbers appear strong, but those haven’t rippled through to the people of Australia yet, so it’s unlikely that the RBA will start discussing rate hikes for a while.”
Australians looking to hedge local assets can take the other side of Mr Horii’s bet.
