Japan fund managers slightly raise holding of shares in June: Reuters poll

TOKYO (Reuters) – Japanese fund managers raised their overall exposure to stocks and trimmed their bond holdings in June, though concerns about escalating trade frictions between the United States and its trade partners kept many on guard, a Reuters poll showed.

The survey of five Japan-based fund managers, conducted between June 13 and 25, showed respondents on average allocated 38.5 percent of their model portfolios to stocks in June, a slight increase from 38.3 percent in May.

It was the first increase in six months after managers continuously reduced holdings of stocks on worries about geopolitical risks as well as trade tensions.

Concern about geopolitical disputes in East Asia subsided a tad after U.S. President Donald Trump met North Korean leader Kim Jong Un on June 12, helping boost sentiment on Japanese shares.

But many investors remained cautious as the U.S. administration threatens to impose tariffs on various imports, triggering warnings of retaliatory measures from China and many other countries.

“While the economic fundamentals are solid, concerns about Sino-U.S. trade frictions and political instabilities in Europe are likely to cap gains,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance.

Fund managers kept their equity allocations by region mostly unchanged from those for May, with weightings on Japan almost flat at 48.9 percent and those on North America also little changed at 28.6 percent.

Their allocations on ex-Japan Asian shares were flat at 3.8 percent, matching near three-year lows in May, suggesting worries about the impact of Sino-U.S. trade frictions.

Fund managers trimmed overall allocation on bonds to 55.0 percent from 55.4 percent in the previous month, reversing three straight months of increase. Still, the June level was far above 42.9 percent in December.

Within bonds, they raised weightings on North America to 30.9 percent from 30.4 percent, the fourth consecutive month with a hike.

They also raised euro zone weightings, to 21.1 percent from 20.6 percent in May, reversing four straight months of trimming.

Although Italian bonds were sold sharply since late May on political instabilities in Italy, markets steadied this month after a new government was formed and clarified that it has no immediate plans to ditch the euro.

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