Japan funds ready to enter Asean markets once hedging risk fixed

THE delayed assault on Asean stock and bond markets by Japanese investors, in the wake of the Bank of Japan's (BOJ) massive monetary easing, could begin in earnest soon as a result of decisions taken by senior financial officials from the Asean+3 countries at a meeting in Shanghai last week.

When the BOJ under governor Haruhiko Kuroda launched its monetary base-doubling quantitative and and qualitative easing (QQE) policy in April, there were strong expectations that a "tsunami" of Japanese funds would rush into Southeast Asia in search of higher yields.

So far, that has not happened even though Japanese institutional and individual investors are said to be eager to increase their exposure to Southeast Asian markets. A principal reason for their hesitancy, officials say, is Japanese investors' fear of being exposed to exchange rate risk.