BlackRock Investment Institute cut Japanese stocks to “underweight” on Monday, saying that a Bank of Japan policy change away from its “ultra-loose” monetary strategy could push global yields higher and reduce risk appetite.
Japan’s government is likely to appoint academic Kazuo Ueda as the next Bank of Japan governor when Haruhiko Kuroda’s second term ends in April, a surprise choice that could finally align the country with other major economies in raising interest rates. The implications are likely to be global and “we see the jolt from a BOJ policy shift as another driver of higher term premium, or the compensation investors demand for holding long-term government bonds,” BlackRock said, adding that the risk of further global yields increases could dampen global risk sentiment.