Research Team at Nomura, suggests that as market volatility remains high ahead of the Japanese fiscal year-end, Japanese investors and corporates’ behaviour has been attracting market attention. Key Quotes “We believe there is no legal binding rule to force Japanese investors to liquidate their exposure to foreign assets owing to negative returns. Insurance companies’ internal accounting guidance, or the “15% rule,” may encourage them to adjust their hedge ratio higher, ahead of the fiscal year-end. The estimated amount affected by this rule could be JPY1468bn ($13.1bn) “at the maximum”, while we judge actual JPY buying as much smaller. USD exposure affected by this rule would be especially small (JPY318bn or $2.8bn). In the medium term, rising hedge costs for USD assets should encourage Japanese insurance companies to lower their hedge ratio gradually.” For more information, read our latest forex news.