Investment EnvironmentAt the beginning of scal 2016, the yield on 10-year Japanese government bonds, which is the prime indicator of Japanese long-term interest rates, stood at minus 0.04%. After following a downward trend because of factors including Brexit, the UK’s decision to leave the EU, the yield turned upward due to wariness about an expected comprehensive assessment of existing nancial policies at the September Bank of Japan monetary policy meeting. Subsequently, upward pressure on Japanese long-term interest rates increased, spurred by an increase in U.S. interest rates on expectations for President-elect Donald Trump’s economic policies in response to the outcome of the U.S. presidential election. However, as a result of conrmation of the Bank of Japan’s policy stance of guiding interest rates to about 0% under the Quantitative and Qualitative Monetary Easing with Yield Curve Control policy framework, yield increases were controlled and the yield ended the scal year at 0.06%.The Japanese stock market’s Nikkei 225 stood at ¥16,719.56 at the start of scal 2016. The market struggled to nd a direction, with a tendency toward risk avoidance in response to factors such as yen strengthening and Brexit and to an increase in the Bank of Japan’s ETF purchases counterbalancing each other. Subsequently, in response to the outcome of the U.S. presidential election, U.S. stocks reached a record high and a U.S. interest rate increase led to a weakening yen trend. The market trended upward to reach ¥18,909.26 at the end of the scal year.At the start of scal 2016, the yen-dollar exchange rate was ¥112.57. A tendency toward risk avoidance surrounding Brexit led to a strengthening yen trend. Subsequently, the yen weakened in response to an increase in the appetite for risk in the market due to the outcome of the U.S. presidential election and the U.S. federal funds rate hike, which increased interest rate differentials. However, President Trump’s warning about the strength of the dollar led to repurchasing of the yen, which ended the scal year at ¥112.19.International InvestmentsIn its overseas investments, Zenkyoren pays extremely close attention to exchange risk, country risk and other risks, as we invest primarily in foreign-currency-denominated bonds and foreign equities, and in yen-denominated loans and bonds for foreign governments.Our subsidiaries in New York (ZAMA) and London (ZEL) undertake support activities related to securities investments, overseas investments, and so on.Reinsurance ActivitiesReinsurance is a contract for transferring a part of insurance liabilities assumed by a direct insurance company to domestic and overseas insurance companies. Zenkyoren utilizes reinsurance as one of the risk diversications in order to maintain sound business operation in case of natural catastrophic events. The reinsurance panels in Zenkyoren are stringently selected through consideration of their evaluation by the rating agencies and business performance.March 31, 2016March 31, 2017Long-term interest rate (10-year JGB yield)*Minus 0.05%0.06%Stock market (Nikkei 225)¥16,758.67¥18,909.26Foreign exchange rate (¥/$)¥112.68¥112.19* JGB: Japanese government bond11Annual Report 2017

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