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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