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3 Nov 2015
JPY taking a breather ahead of Japan Post IPO - MUFG
FXStreet (Delhi) – Derek Halpenny, Research Analyst at MUFG, notes that the markets are closed today in Japan ahead of a big event tomorrow – the IPO of Japan Post.
Key Quotes
“The government is selling 11% of its shares in Japan Post Holdings and the holding company is selling 11% of shares in its banking and insurance companies. The portion being sold amounts to about USD 12bn and the bulk of the shares (about 80%) are going to individual investors in Japan.”
“It will be the largest asset sale by the government in nearly 30 years. Indicative pricing today is pointing to trading starting at between 6-8% higher depending on which entity. With about 20% going to foreign investors there might be chatter of IPO-related demand for the yen tomorrow, although we do not expect much IPO-related volatility.”
“However, the big FX story comes beyond tomorrow with the next big public fund diversification flow coming from Japan Post. Japan Post Bank has about JPY 200trn in assets with about half of that total in JGBs. As privatisation proceeds, getting a better return on assets will be a key objective and a shift into foreign securities will see large outflows from Japan. So while the GPIF diversification flow slowly comes to an end, Japan Post is set to take over.”
Key Quotes
“The government is selling 11% of its shares in Japan Post Holdings and the holding company is selling 11% of shares in its banking and insurance companies. The portion being sold amounts to about USD 12bn and the bulk of the shares (about 80%) are going to individual investors in Japan.”
“It will be the largest asset sale by the government in nearly 30 years. Indicative pricing today is pointing to trading starting at between 6-8% higher depending on which entity. With about 20% going to foreign investors there might be chatter of IPO-related demand for the yen tomorrow, although we do not expect much IPO-related volatility.”
“However, the big FX story comes beyond tomorrow with the next big public fund diversification flow coming from Japan Post. Japan Post Bank has about JPY 200trn in assets with about half of that total in JGBs. As privatisation proceeds, getting a better return on assets will be a key objective and a shift into foreign securities will see large outflows from Japan. So while the GPIF diversification flow slowly comes to an end, Japan Post is set to take over.”