"We think Japanese buying of overseas bonds could be close to a trillion dollars this year "
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/06/Japan's%20trillion%20dollar%20bond%20rotation%20HSBC.pdf#page=1&zoom=auto,-12,848
"Tracking bond flows after the BoJ shift
The aggressive monetary easing that Japan is planning to
boost its economy and kill deflation is already having a big impact in international bond markets. Money is flowing out
of Japan in anticipation of further yen weakness and because of the incredibly low JGB yields. The biggest beneficiaries
are core European bond markets as Japanese investors seek
additional yield and the prospect of currency gains. Over the past six months, 20% of the gross issuance of core Eurozone
debt has effectively been bought by Japanese investors.
With more stimulus likely, we think this trend will continue, driving down yields in core Eurozone markets, particularly
Germany and France. We think the yield on 10-year German
Bunds could fall close to 1.0% later this year, reflecting the extensive new demand for a re
latively scarce product. This
goes against the consensus view that Bund yields will rise. "
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USD1 trillion outflow
In total, we estimate USD700bn-USD1trn could flow out of
Japan over the next year, reflecting both higher historical levels of Japanese investor ownership and an extrapolation
of recent evidence of flows from the mutual fund sector. The beneficiaries include other core markets, supranationals and agencies. We think Indonesia, Mexico, Brazil, Poland, Turkey and South Africa will be among the emerging
markets affected.
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"Uridashi bonds – Turkey for retail
A significant investment channel for Japanese
household investors (sometimes referred to as Mrs
Watanabe), which is also incorporated in these
investment trust flows, is the uridashi market. A
uridashi bond is denominated in a foreign currency
and sold in the Japanese market by a non-Japanese
issuer and tends to be short term, ie up to 3 years.
Brazil has been a key target and more recently there
has been greater interest in Turkey. Turkish lira
bonds sold to retail investors in Japan outstripped
those of all other emerging markets in 2012. Of the
USD19.5bn uridashi bonds (Bloomberg data) sold
last year, USD3.7bn were issued in Turkish lira. This
is second only to the USD6.7bn issuance of
Australian-dollar uridashi bonds. "
