The yen¡¯s rebound has spurred a roll-back of exchange rate hedges by global investors who are no longer anticipating a rapid slide in the Japanese currency.
Expectations that the yen may strengthen further have prompted strategists at JPMorgan Chase & Co. to UBS Group and BNP Paribas Asset Management to recommend unwinding currency hedges on Japanese shares that have outperformed many regional peers, as that would boost returns in dollar terms.
¡°At this moment, the recommendation is to invest in Japanese stocks without hedging the currency exposure, to benefit from higher dollar-denominated returns from potential yen appreciation,¡± said Wei Li, a multiasset quant solutions portfolio manager at BNP Paribas Asset Management.
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