Allianz Investment: Expects the Bank of Japan to reduce bond purchases and raise interest rates, remains optimistic about Japanese stocks

Allianz Investment expects that the Bank of Japan will announce a reduction in bond purchases and an interest rate hike at the July meeting. It is anticipated that the Bank of Japan will raise the upper limit of interest rates to around 0.25%. Allianz Investment believes that stabilizing the Japanese yen and preventing further depreciation of the yen are crucial for stabilizing consumption and market sentiment. It is expected that the Bank of Japan will reduce bond purchases by a considerable amount, with a possible monthly reduction of ¥30-40 trillion over the next two years to encourage buyers to reinvest in the market. In addition, Allianz Investment maintains a cautious view on Japanese government bonds and believes that current prices largely reflect the upcoming changes, hence there may be a short-term adjustment of positions in Japanese government bonds to neutral