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from Global Investing:

Japan’s big-money investors still sitting tight

More on the subject of Japanese overseas investment.

As we said here and here, Japanese cash outflows to world markets have so far been limited to a trickle, almost all from retail mom-and-pop investors who like higher yields and are estimated to have 1500 trillion yen ($15.40 trillion) in savings. As for Japan's huge institutional investors -- the $730 billion mutual fund industry and $3.4 trillion life insurance sectors -- they are sitting tight.

If some are to be believed, the hype over outflows is misguided. Morgan Stanley for one reckons Japanese insurers' foreign bond buying may rise by just 2-3 percent in the next two years, amounting to $60-100 billion. Pension funds are even less likely to re-balance their portfolios given large cash flow needs, the bank said.

But a Reuters survey last week revealed several insurance companies are indeed considering boosting unhedged foreign bond holdings.  Insurers currently hold almost half their assets in Japanese government bonds and risk being crowded out of the JGB market as the central bank ramps up purchases.  A recent survey by Barclays also showed Japanese investors keen on overseas debt.

Barclays analyst Bill Diviney offers the following explanation as to why institutional investors haven't ventured out so far:

from Expert Zone:

Can we provide more cover at lower costs?

(The views expressed in this column are the author's own and do not represent those of Reuters)

When it comes to financial products, does the general rule "low cost = low quality" hold true? By quality, I mean the quality of experience and service levels that should be expected from a standardised product.

from Global Investing:

Quarter-end rebalancing: A myth?

With world stocks up more than 10  percent since the start of the year, it must be tempting for investors to cash in their gains before the quarter-end/fiscal year-end. Or is it really?

JP Morgan, which analysed equity buying of institutional investors including pension funds, insurance companies and investment funds in the United States, euro zone, Japan and the UK, finds that there is no empirical evidence of quarterly rebalancing by pension funds or insurance companies.

from Breakingviews:

EU eases insurers’ worst capital fears – for now

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

For the first time in a month, UK insurers’ pulses are slowing down. On March 21 the European Parliament signed amendments to the EU’s new Solvency II legislation, which in February looked set to deal them a nasty blow. But insurers - and pension providers - can’t yet afford to breathe easily.

from Breakingviews:

AIA’s new chief could unlock two deals

In giving its Asia chief executive the chop, American International Group may have unlocked two deals. First, the flotation of its AIA division in Hong Kong, which should now go ahead after a false start. Second, an eventual merger between AIA and the Asian portion of its big rival -- and recent failed suitor -- the UK's Prudential.

AIG's decision to oust former AIA head Mark Wilson is no surprise. When Pru launched its bid for AIA in March, Wilson privately cast doubts on the merits of the takeover offer, a deal championed by AIG's combative chief Robert Benmosche. Wilson's perceived opposition was one reason Pru shareholders began to turn against the deal.

from Breakingviews:

Axa will have to dig deeper for Asian buyout

For the second time in five years, minority shareholders in Axa Asia-Pacific Holdings face the prospect of being bought out on the cheap. The parent, Axa SA, has got into bed with AMP and the Aussie life assurer is bidding $10.3 billion for the whole of Axa Asia. 

As before, the independent directors of Axa Asia have noticed the prospect, and have rejected the offer. On Monday Axa launched a 2 billion euro rights issue -- almost twice what it needs for the deal-- which rather suggests the parent expects to pay more.

from Breakingviews:

Axa will have to dig deeper for Asian buyout

For the second time in five years, minority shareholders in Axa Asia-Pacific Holdings  face the prospect of being bought out on the cheap. The parent, Axa SA, has got into bed with AMP and the Aussie life assurer is bidding $10.3 billion for the whole of Axa Asia.

As before, the independent directors of Axa Asia have noticed the prospect, and have rejected the offer. On Monday Axa launched a 2 billion euro rights issue -- almost twice what it needs for the deal-- which rather suggests the parent expects to pay more.

from Breakingviews:

The contradictions at ObamaCare’s heart

At the heart of the economic case for U.S. healthcare reform is a simple comparison: Whereas America spends 16 percent of GDP on healthcare, the average across OECD countries was 8.9 percent, as of 2007.

So what do these frugal healthcare systems look like from the ground? T.R. Reid tries to find out in his book "The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care."

from Breakingviews:

Private equity patient capital gets restless

Private equity relies on long-term, so-called "patient" capital of the sort supplied by pension funds and insurance companies. This is a model that has served the industry well over the past quarter century. By locking investors in, buyout firms were able to manage investments without worrying unduly about short term performance. But it breaks down when, as now, patient capital becomes restless.

The situation at French buyout firm PAI Partners shows how fraught it can become when investors fall out with their buyout firms.

from Tales from the Trail:

Pinky finger bitten off in healthcare reform fracas

The healthcare reform debate just reached a new level of vitriol, with a pro-reform protester biting off the fingertip of a counter-demonstrator in a fistfight between the two men, according to police in California.fingerbiter

The Ventura County Sheriff's Department says the brawl erupted Wednesday evening outside a shopping mall in the Los Angeles suburb of Thousand Oaks.

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