According to the Australian Financial Review today, the weakening Australian dollar is starting to become a catalyst for Japanese investors to take a closer look at the (Australian) market.
An executive at a major fund management firm said that while full details could not be disclosed they planned to launch products that would give Japanese investors exposure to Australian shares, hybrid securities and real estate investment trusts, as demand for higher yielding products rises.
While Japanese households show increased interest in Australian shares, institutional demand for Australian bonds is on the rise. The forces of Abenomics – which is encouraging more funds to be invested outside of Japan as the Yen weakens versus other major currencies is pushing more of Japan's vast savings offshore.
Tax changes too are driving more funds in the Australian bond market. Sources said some Japanese funds could see their allocations to Australian bonds, which have already tripled in three years, double again as a result of flows into life insurance products that are structured to mitigate income tax.