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Question of the Week - May 10th 2016

Are funds cutting allocations to Japan equities as fears grow on Central Bank's easing efforts?

 

Chart 1: Quarterly Trading Volume and Cost Trends for Japan 

 

Chart 2: Percentage of Peer Clients with Net Positive Flow in Japan  

 

Chart 3: Quarterly Net Flow and Cost for Japan  

 

  • In January 2016, Japan surprised markets by adopting a negative interest rate. We analyzed the impact this announcement had on fund allocations to Japanese equities, using a sample of our institutional peer group as a proxy.
  • Total Q1 trading volumes for the peer group were in line with 2015 averages (trading was light in Q4). Average costs are in line with previous quarters as well.
  • However, in 2016Q1 the percentage of institutions with negative trade imbalance increased by 8% and overall we see a negative trade imbalance in Japan for Q1.

 

Above statistics are based on select 100 institutions within the ITG Peer Group Database that trade in Japan. Implementation shortfall costs are measured relative to the release to the desk and are expressed in basis points.

 

Refer to ITG Peer Analytics for information on available ITG Peer Group Database based analytics.

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