The Japanese Quest to Maintain Returns is Bullish for the World Economy

Yoshinobu Tsutsui, the president of Japan’s biggest private life insurer, Nippon Life Insurance Co., said negative interest rates are hurting the company’s sales and bottom line.

In an effort to counter falling yields in Japanese government bonds the company is searching abroad for investments in infrastructure equity funds that invest money into power plants, airports, and schools.

And Nippon Life Insurance are not the only one, they’re joined by Dai-ichi Life Insurance and Sumitomo Life Insurance.

Dai-ichi Life Insurance Co. is increasing investments in aircraft leasing and infrastructure to generate stable returns.

Sumitomo Life Insurance Co. is increasing its foreign credit investment team and investing in US corporate bonds.

Combined, Japanese life insurance companies control nearly ¥350 trillion. That’s a staggering US$3.2 trillion in financial assets. And as you can see, it’s being forced to create real wealth to generate returns.

Not only are Japanese bonds yielding less, but so are government bonds around the globe. Now insurance companies are venturing into more diverse investments to maintain returns.

Such an amount of money looking to invest in infrastructure could be an absolute game changer. This sort of investment is going to create huge wealth in industries that benefit all of us.

Everyone keeps focusing on the debts. But the Japanese funds show also there is an enormous amount savings looking for somewhere to invest. And it’s being forced to create real wealth in infrastructure and by helping to fund corporate activity in various sectors of the economy.

This is just one more indicator to suggest economic collapse is unlikely for 2016, while there is this amount of savings forced to create wealth and fund business activity.

This increased interest from the insurance sector has already been filling the gap left by deleveraging banks and austerity stricken governments after the financial crisis.

This sets the scene for continued construction right now, and confirms the real estate cycle is still on track.

Know where the gains in infrastructure will eventually end up. Cycles, Trends and Forecasts is the only service that can tell you that. But more importantly, it can also tell you how you can time it all to your advantage.

The key thing in markets is to know the real estate cycle.  If the recovery from the global financial crisis caught you off guard and you are waiting for the next market collapse this year, history is not on your side. An economic collapse in 2016 is exceedingly unlikely.

We are still in the first half of the real estate cycle, but it’s slowly starting to build. All this infrastructure will enable land prices around the world to go higher.

Interest rates may stay low for some time, and the move by the Japanese life insurers suggests a big real estate cycle might still be in front of us. It’s incredibly exciting. Make sure you know how to take advantage of it.

This is the real estate cycle turning before your eyes. To time it all to your advantage, go here.


Terence Duffy,
Lead Researcher, Cycles, Trends & Forecasts

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Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come.

Money Morning Australia